Shares of General Motors Corp plunged 17 percent on Monday after a report that the U.S. Treasury is directing the automaker to lay the groundwork for a bankruptcy filing by June 1.

GM, which is operating under $13.4 billion of emergency government loans, has until June 1 to win sweeping concessions from bondholders and the United Auto Workers union. The Obama administration has warned that the alternative would be bankruptcy.

The New York Times said the government's goal was to prepare for a fast surgical bankruptcy, quoting people who had been briefed on the GM plans.

Sources familiar with the situation had told Reuters that GM was in intense and earnest preparations for a possible bankruptcy filing.

JPMorgan analyst Himanshu Patel said that deep balance sheet restructurings asked for by the U.S. Treasury would be a tough spill to swallow for bondholders and the UAW union, making bankruptcy more likely.

Shares of GM were down 17 percent, or 36 cents, to $1.66 on the New York Stock Exchange.

(Reporting by Soyoung Kim)

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