GM Issues Paychecks Early Amid Bankruptcy Fears
May 27 2009 - 8:52PM
Dow Jones News
General Motors Corp. (GM) issued early paychecks this week to
all workers in a move the auto maker said is intended to calm
employees who fear they won't get paid if the company files for
bankruptcy.
Employees' pay would not be at risk in a bankruptcy, but the
company wanted to reassure workers they will get their checks, GM
spokesman Tom Wilkinson said Wednesday.
Around 90,000 U.S. hourly and salaried workers will get paid
three days early this week. GM mailed or direct deposited the
checks Tuesday rather than Friday as regularly scheduled.
"This was purely psychological" Wilkinson said. "Everybody is
just very anxious."
GM faces almost certain bankruptcy after it failed to get
bondholders to agree to swap $27 billion in debt for equity in a
restructured GM. The bond exchange expired late Tuesday.
The U.S. Treasury, keeping GM alive on federal loans, gave the
auto maker until Monday to become viable or file for Chapter 11
protection.
Wilkinson said employee pay would not be at risk should GM enter
bankruptcy. One of the first courses of action would be to ensure
workers are paid so the company could continue operating.
GM also planned to make critical payments to its direct-material
suppliers early and ahead of Monday's deadline. The company told
suppliers earlier this month it will pay them on May 28 instead of
June 2, a move it said was made due to a flood of economic
uncertainty in the industry and to support struggling
suppliers.
-By Sharon Terlep, Dow Jones Newswires; 248-204-5532;
sharon.terlep@dowjones.com