Business NEWS
Collapse of General Motors Corp. files for Chapter 11 bankruptcy protection!
By Amarendra Bhushan for CEOWORLD Magazine Updated:June 1, 2009
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The Detroit-based General Motors Corp., for decades a symbol of American manufacturing supremacy, filed a Chapter 11 petition to the U.S. Bankruptcy Court for the Southern District of New York.
The collapse of the century-old auto giant came at a time when the United States is experiencing the worst economic recession. Just a month ago, Chrysler LLC, the country’s third largest automaker, took the same path.
- Hoping to reemerge from bankruptcy protection as a new, leaner company within 60 to 90 days, GM will close 11 U.S. factories and idle three others to slash its operating costs and cut 2,600 dealerships.
- It has been looking to cut 21,000 factory jobs from the 54,000 workers it now employs in the United States.
- It is the largest industrial bankruptcy in American history and the fourth largest overall.
- The filing — number 09-50026 — was signed by Fritz Henderson, chief executive of the stricken carmaker.
- Weil Gotshal & Manges, one of New York’s best-known bankruptcy law firms, will represent GM through the Chapter 11 process.
- The United Auto Workers (UAW) union will take 17.5 per cent in shares and the governments of Canada and Ontario will lend $9.5 billion (£5.9 billion) and get 12 per cent equity and $1.7 billion debt in return.
- The US Government will provide an additional $30 billion in financing to get the giant through bankruptcy.
- The U.S. Treasury Department will own 60 percent of the Detroit automaker.
- GM had $83bn (£51bn) in assets against liabilities of $173bn.
- GM’s Fairfax plant is not expected to be among the 14 months that GM will close by the end of next year as part of its restructuring. The Fairfax factory, with about 2,500 employees, makes the popular Chevrolet Malibu and the Saturn Aura. GM is preparing to launch a new 2010 Buick LaCrosse at the plant later this month.
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