WASHINGTON (AFP) – General Motors skidded on the stock market Monday after reports that the government was directing the troubled auto giant to lay the groundwork for a June 1 bankruptcy filing.

GM plunged 17.65 percent to 1.68 dollars at 1405 GMT in initial trades as the market opened after a long Easter weekend.

The New York Times reported Monday that the Treasury Department was directing GM to prepare for a bankruptcy court-supervised restructuring despite the company's public contention that it could still reorganize outside court.

President Barack Obama?s auto task force spent last week in meetings and on conference calls with GM officials and advisers in Detroit and Washington, the newspaper said, quoting people with knowledge of the plans.

Those talks are expected to continue this week.

The goal is to prepare for a fast "surgical" bankruptcy, the report said.

The government on March 30 gave GM, which has received 13.4 billion dollars in public aid, 60 days to come up with an aggressive restructuring to be eligible for further aid the company says it needs to avoid collapse.

Some analysts say creditors are pressing GM for a better deal.

"GM?s creditors seem to believe that they should get a better deal than the car company is offering them so that it can reduce its debt," said Douglas McIntyre of 24/7 Wall Street.

"Even the most senior creditors are being asked to take a very modest portion of the face value of their loans to help the huge car company get out of financial trouble," he said.

Creditors believe that they have the ability to stop or at least draw out a Chapter 11 bankruptcy process, McIntyre said.

"That would make a bankruptcy less attractive to the Treasury, which would simply like to get the GM matter resolved in a way that does the least to disrupt the industry, its suppliers, and its employees," he said.

According to The Wall Street Journal, the creditors may find that they have very few rights.

The paper said, "Some bondholders fear GM?s fast-track reorganization inappropriately mirrors what was done last fall when Lehman Brothers filed for bankruptcy protection as the US financial system seized up."

The government decided to let Lehman, the US investment banking icon, collapse in September last year amid financial turmoil following a home mortgage meltdown.