General Motors Corp. and Chrysler LLC would be in default of up to $17.4 billion in federal loans if the United Auto Workers or another union engaged in a strike or work stoppage, a loan provision that essentially strips the union of a powerful negotiating tactic it has used several times in recent years.
The provision is buried deep in the Loan and Security Agreement between GM and the U.S. Treasury Department governing the use of up to $13.4 billion in short-term loans that prevented the automaker's collapse, according to documents filed Wednesday with the U.S. Securities and Exchange Commission. Other events that would trigger a default include failing to make a payment on time or voluntarily filing bankruptcy.
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