GM Bankruptcy: End of An EraAfter years of losses, General Motors has filed for bankruptcy protection, a move once viewed as unthinkable that became inevitable after years of losses and market share d...
After years of losses, General Motors has filed for bankruptcy protection, a move once viewed as unthinkable that became inevitable after years of losses and market share declines capped by a dramatic plunge in sales in recent months. The automaker is set to close more than a dozen factories and slash 20,000 jobs in the process. The bankruptcy is likely to lead to major changes and job cuts at the battered automaker. But President Obama and GM CEO Fritz Henderson both promised that a more viable GM will emerge from bankruptcy.
In the end, even $19.4 billion in federal help wasn't enough to keep the nation's largest automaker out of bankruptcy. The government will pour another $30 billion into GM to fund operations during its reorganization. U.S. Judge Robert Gerber, the bankruptcy judge will oversee GM's bankruptcy, ruled Monday that GM will have access to $15 billion in government funds immediately. He will make a final ruling on bankruptcy financing approval on June 25.
Taxpayers will end up with a 60% stake in GM, with the union, its creditors and federal and provincial governments in Canada owning the remainder of the company. Owners of GM cars should see little change as a result of the bankruptcy since warranties will still be honored. But there will be plenty of pain caused by the bankruptcy and the company's efforts to stem losses. GM will shed its Pontiac, Saturn, Hummer and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year. That could result in more than 100,000 additional job losses if those dealerships are forced to close.