PRESIDENT-ELECT Barack Obama's transition team is exploring a swift, 'prepackaged' bankruptcy for auto makers as a possible solution to the industry's financial crisis, according to a person familiar with the matter.

Obama's team has already contacted at least one bankruptcy law firm to say that Daniel Tarullo, a professor at Georgetown University's law school who heads Obama's economic policy working group, would call to discuss the workings of a so-called 'prepack,' according to sources. United States law makers yesterday postponed until December a vote on whether to give General Motors Corp, Ford Motor Co and Chrysler LLC a US$25 billion bailout as an alternative. Auto makers such as GM could use court protection to reduce debt and reject unfavorable contracts.

'It creates the environment to deal with GM's problems but limits government financial commitment,' said bankruptcy lawyer Mark Bane of Ropes & Gray in New York.

Tarullo referred the matter to the transition team press office. Spokeswoman Stephanie Cutter said, 'We have not put out anything specific for the auto industry yet.'

GM, the largest US auto maker, said it might run out of cash as early as the end of the year and that the risk was even greater by mid-2009. GM Chief Executive Officer Rick Wagoner said this week GM would have to liquidate if it went into bankruptcy.

The auto maker probably has weeks rather than months left before it runs out of money unless it gets federal aid, Jerome York, an adviser to billionaire Kirk Kerkorian and a former GM board member, told Bloomberg Television.