Currently reading: GM: 'We won't pay off our debt'
General Motors raises the stakes in stand-off with bondholders

General Motors has raised the stakes in its stand-off with major bondholders by announcing its intention not to pay off $1 billion (£600 million) in debt due on 1 June.

GM will offer shares in place of its debt, the only other option being for the company to file for bankruptcy protection.

The move is preparation for an expected larger version of the debt-for-shares offer, in which GM hopes to clear $28 billion (£19.2 billion) in return for equity in the company.

If the bondholders don’t accept the offer, GM may enter bankruptcy-court protection, wiping out its debts and giving it a chance to become a viable concern again.

Matt Rigby

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