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Cars Blog

GM shows signs that bankruptcy filing is coming

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May 18, 2009 10:29 am
By Peter C. T. Elsworth

DETROIT -- The letters General Motors sent to 1,100 of its dealers telling them to close represent another strong sign the automaker will end up in Chapter 11 in two weeks, because GM has little clout to close dealerships unless it is in bankruptcy, accrrding to USA Today.

GM sent letters to the bottom 18% of its dealers Friday telling them it won't renew their contracts in October 2010. Actually pulling the plug on them would be tough, however. State laws favor dealers, who often have invested millions of dollars to keep their dealerships up-to-date and well-stocked.


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