Business and Finance

TOKYO–More than 100 Japanese companies face possible bad debts if General Motors Corp. files for bankruptcy, a private credit research agency said yesterday.

GM has close business ties with 102 Japanese companies, Teikoku Databank Ltd. said. They include auto-parts makers and suppliers such as Aisin Seiki Co. Ltd., Bridgestone Corp. and Mitsubishi Electric Corp.

GM said not enough of its bondholders agreed to swap their debt for company stock, meaning that the money-losing auto giant is likely to be headed for bankruptcy protection.

GM has until Monday to finish restructuring or file for bankruptcy.

Amid worries over GM’s possible bankruptcy, the U.S. Treasury has launched a $5 billion (U.S.) support program to provide government guarantees for financing auto parts.

Aisin Seiki said it had applied for the U.S. government’s auto-parts support program. It said it had around 1.7 billion yen ($19 million Canadian) in bad debt from GM at the end of April.

Teikoku Databank did not specify the number of Japanese companies applying for the U cheap car insurance.S. auto-parts assistance program. But it warned that not every applicant would be able to get federal assistance.

"There is a potential risk that GM’s bankruptcy could trigger bad debt" among the 102 Japanese companies, the research agency said. GM, which has received $19.4 billion (U.S.) in federal loans, faces a list of restructuring tasks to complete before the Monday deadline.

It must get new cost-cutting agreements with unions, close factories, cut jobs, and complete the debt-for-stock swap with 90 per cent of its bondholders to prove to the government it can repay loans.

GM lost $6 billion in the first quarter as car buyers worldwide steered clear of showrooms, partly out of fear that GM may go bankrupt and stop honouring its warranties.

Associated Press

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