Canada plans for carmakers bailout

Help for Canada's auto industry, including $700 million (£385 million) for parts suppliers, has been provisionally pledged by the Canadian government.

But that might not prevent General Motors (GM) and Chrysler being forced to file for bankruptcy protection, said industry minister Tony Clement.

He said that their survival is difficult to predict after Chrysler was given until the end of April to seal a restructuring deal with Fiat, while GM seeks salvation elsewhere.

Both companies must present plans that maintain the 20% Canadian share of production if they are to justify the substantial amounts of bailout cash they need to stay in business.

Said Mr Clement: "We have to ready ourselves for other options, including Chapter 11 in the US and CCAA bankruptcy protection here in Canada."

He said that the government will meanwhile act to safeguard warranties in the event that a carmaker does file for bankruptcy, which is similar to action taken in the US.

The auto industry directly employs over 150,000 Canadians, plus another 340,000 indirectly.

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