GM officially files for bankruptcy
Posted on Jun 01, 2009 by Zane Merva in Business
General Motors, often thought of as the cornerstone of US economy and pride of the free market, filed for bankruptcy protection this morning at 8am in New York City.
Related: Watch GM President Fritz Henderson’s live press conference on the company’s bankruptcy at 12:15 here
The decision to file will open up $30-billion in additional taxpayer funds to finance the company’s restructuring. In return, the US Government will own approximately 60% of the “new” General Motors. The Canadian Government will also provide an additional $9.5-billion in backing to the company in return for a 12% stake. The UAW will receive a 17.5% and current GM bondholders will receive 10%.
General Motors currently employs over 92,000 people in the United States alone and supports nearly 1/2-million retired workers.
Hopes for a fast-track bankruptcy were bolstered by the announcement that Chrysler, who filed in April, could emerge from protection as early as this week. The judge over-seeing Chrysler’s bankruptcy proceedings ruled late Sunday that the company could sell nearly all of its assets to European suitor Fiat.
General Motors was founded a century ago in 1908. At it’s peak in the 1950s GM employed over 500,000 people, held a 50% market share of the US auto industry, and was the worlds largest company- twice the size of Standard Oil, which held the #2 position.
Al Koch, a managing director at AlixPartners LLP, will be appointed chief restructuring officer in charge of liquidating GM assets. Koch has experience in large turnarounds such as KMart.
Analysts expect bankruptcy proceedings to “split” General Motors into two companies. A “new” GM would hold the most promising assets while a “bad” GM would carry the weight of the liquidation efforts. One goal of the restructuring would be to make GM solidly profitable at a US market 10-million units a year. Just a few years ago US car sales hit an all time high of 16-million units before crashing during the middle of last year.
GM’s bankrupcty will be the third-largest and most carefully orchestrated restructuring in US history.
Related posts:
- GM core brand sales up in December, down 2009 vs 2008 from non-core brand shuttering DETROIT – GM dealers in the U.S. reported 160,996 retail...
- Do Ed Whitacre and General Motors “get” cars? The short answer is no. Whitacre has self-admittedly stated he's...
- First quarter 2010 results are in! General Motors Company today announced its first quarter 2010 results,...
- GM snags Microsoft CFO, Chris Liddell, for company Vice-Chairman/CFO slot DETROIT - Chris Liddell has been appointed General Motors vice...
