GM, Chrysler staring at bankruptcy

General Motors (GM) and Chrysler were directed to overhaul their proposed recovery plans to get further federal aid, and officials of the Barack Obama administration reckon that a structured bankruptcy may ultimately be their best chance. The White House will provide operating funds to both the automakers for several weeks, but the struggling Detroit titans must undergo significant restructuring, US officials said. The Obama administration asked GM CEO Rick Wagoner to step down. He will be replaced by Fritz Henderson, the company's chief operating officer (COO). Board member Kent Kresa will serve as GM's interim chairman. GM will also replace most of its Board. The US government was silent on how much more aid GM may receive if it devises a successful recovery plan. GM will get 60 days and Chrysler 30 days in which to prove they can run viable businesses. Chrysler will get US$6bn in aid only if it completes a partnership with Italian carmaker Fiat in 30 days. According to a White House document, their best chance at success may well be a structured bankruptcy. Still, it is not the administration's first choice, officials said. GM sought as much as US$16.6bn in additional aid after receiving US$13.4bn since December. Chrysler sought US$5bn after receiving US$4bn. Both had until March 31 to show progress operationally as well as financially to obtain more financial assistance.