General Motors to suggest bankruptcy as an option

General Motors (NYSE: GM) has been saying for months that bankruptcy is not an option and in fact, not even a possibility. Of course most of us knew they were lying, but now they appear to be on the brink of finally admitting that.

The Treasury Department believes that GM needs at least $5 billion more to keep operating into the second quarter, and GM is reportedly poised to present two options: Either give us more cash now, or put us into bankruptcy and provide the debtor-in-possession financing.

The Wall Street Journal reports (subscription required) on the details surrounding the viability plan the company is theoretically required to present to lawmakers on Tuesday. Bankruptcy might not be a politically viable plan, but it probably is the best option. By not forcing the company to file as a condition of the bailout, the federal government has already wasted enormous sums of money on debt service and bloated contracts that could have been reduced under a bankruptcy filing.

If GM is going to file for bankruptcy eventually -- which it is -- the sooner the better. With the size of the company's debt load, every day that goes by without a filing is cash out the door.

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