Though we were just warned that new deals between General Motors and the major auto unions in the U.S. and Canada were unlikely to be completed by their May 27 deadline, word has begun spreading that a tentative agreement has been reached between GM and the United Auto Workers union. While there's no word yet on a deal having been reached between GM and the Canadian Auto Workers union, the major obstacle of convincing the UAW to accept equity in the company in exchange for cash payments to its retiree health care fund appears to have been overcome, pending an official announcement from both parties and a vote by the UAW rank-and-file membership.

Like the deal recently reached by the union and bankrupt Chrysler, the UAW would get a 38% stake of GM for the purposes of funding its VEBA retiree health care trust. Also like its deal with Chrysler, the UAW presumably would not have a controlling interest in GM and sell off its stake as soon as the company was viable.

If true, only two major obstacles remain to avoid a bankruptcy filing before GM's government-imposed June 1 deadline. The first is getting CAW to follow the UAW's lead and sign a new agreement, and the second is to get the majority of GM bondholders to accept a debt-for-equity swap that would erase $27 billion of the automaker's debt but leave creditors with only a 10% stake in the company. The UAW would have its proposed 38% stake, common GM shareholders would hold a 1% stake and the U.S. government would have a majority stake of 51%. Its creditors, however, do not appear willing to accept GM's debt-for-equity offer as it stands, so unless a miracle happens in the next two weeks, a Chrysler-like Chapter 11 bankruptcy filing still appears the most likely result.

[Source: CNN Money, Photo by Bill Pugliano/Getty]