Hedge funds and other investors stand to make billions of dollars on credit insurance contracts if GM declares bankruptcy - a prospect that is complicating efforts to persuade creditors to agree to a restructuring plan for the carmaker, analysts say.
Holders of $27bn in GM bonds have until June 1 to decide whether to swap their debt for a 10 per cent equity stake in the company as part of an offer that would give the US government 50 per cent of the shares; a United Auto Workers union-run health care fund 39 per cent; and existing shareholders 1 per cent.
