In a last-ditch effort to prevent bankruptcy, GM failed to meet its debt-reduction schedule when its offer of $27 billion in bond debt in exchange for a 10 percent share in the reorganized company was not accepted before a midnight deadline. According to AutoNews, the plan, arranged in consultation with the Obama administration, did not yield any offers at an equitable rate.

Bond holders rejected the offer as being unfairly low, with restructuring analyst Richard Tilton asserting that it was an apparent move to direct blame toward bondholders and gloss over the years of poor judgment and denial which many consider the real cause of GM's demise. GM is expected to file for Chapter 11 by the June 1 deadline, set by the Obama Administration for the automaker to prove its sustainability.

The Obama Administration auto task force wants GM to hammer out extensive compromises with the UAW regarding its debt toward a trust fund for retiree healthcare, other measures to vastly reduce expenses, and show proof of a consensus among the constituents before filing Chapter 11, following in the footsteps of Chrysler LLC BK. In addition, the U.S. Treasury is prepared to offer another $50 billion to finance GM's bankruptcy proceedings.