There are no two ways about the fact that General Motors (GM) is in dire straits! With the June 1 federal deadline for putting up a restructuring plan inching closer, the company that has already spent $10.2 billion - out of the $15.4 billion federal loan - finds itself right in the middle of all sorts of problems.

Going by the GM's Thursday reports, the company's first quarter revenue plunged by almost 50 percent, resulting in a loss of nearly $6 million, largely due to a nosedive in its global sales. The GM Chief Financial Officer, Ray Young, has acknowledged that even drastic cost-cutting measures will prove fruitless in the face of the steep decline in demand.

Talking to reporters, Young said: "You could not offset the revenue implosion that we experienced here. Once you start losing revenue, you get yourself into a vicious circle in which you cannot recover." The 'revenue implosion' resulted largely from GM's effort to cut inventories, thereby reducing production by 900,000 vehicles worldwide. While the company would desire an out-of-court restructuring, Chapter 11 bankruptcy reorganization is apparently on the cards!

Douglas Baird, a University of Chicago law professor and bankruptcy cases expert, said: "I think bankruptcy is highly likely, not because the losses are so bad, but because everyone has realized that this company needs fundamental restructuring."