End of the road for General Motors?

It may be the end of the road for troubled US auto maker General Motors with US Treasury directing the company to prepare plans for a bankruptcy filing by 1 June. While GM's chief executive, Fritz Henderson, is still working on plans to salvage a part of the company, he has tasked staff to work with legal and government advisers to prepare for bankruptcy filing, although he maintains it is not inevitable.

A new plan under consideration would create a new company that would buy the ''good assets'' from GM almost as soon as the auto major files for bankruptcy.

Other assets from unwanted brand, factories and health care obligations would remain with the old company to be liquidated over a few years.

Treasury officials are reportedly assessing a scenario in which the ''good GM'' with $5 billion to $7 billion of federal financing enters and exits bankruptcy in about two weeks.

Resolving the issues of the rest of GM may require as much as $70 billion in government funding according to experts and federal officials. They say that additional funds would be required to resolve the problems of health care obligations and liquidation of factories.

According to John Paul MacDuffie, associate professor at the Wharton School at the University of Pennyslyvania, an out-of-court restructuring was unlikely to be acceptable to the Obama administration given its rejection of an earlier restructuring plan drawn up in March. The plan had failed to factor-in the concessions that were required from bondholders and the union, on which an agreement has still not been reached.