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GM Files for Bankruptcy


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General Motors files for bankruptcy protection

NEW YORK – General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

The fallen icon of American industrial might will rely on $30 billion of additional financial assistance from the Treasury Department as it reorganizes. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

GM will follow a similar course taken by Chrysler LLC, which filed for Chapter 11 protection in April and hopes to emerge from its government-sponsored bankruptcy this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take a 12.5 percent stake, with the United Auto Workers getting a 17.5 percent stake and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

President Barack Obama is scheduled to address the nation about GM's future at midday from Washington, and GM CEO Fritz Henderson is to follow him with a news conference in New York.

Beyond the bankruptcy announcement Monday, GM is expected to reveal 14 plants it intends to close. One of those plants, however, will be retooled to build a small car.

GM's filing comes 32 days after a Chapter 11 filing by Chrysler, which also was hobbled by plunging sales of cars and trucks as the worst recession since the Great Depression intensified.

The third of the one-time Big Three, Ford Motor Co., has also been stung hard by the sales slump, but it avoided bankruptcy by mortgaging all of its assets in 2006 to borrow roughly $25 billion, giving it a financial cushion GM and Chrysler lacked.

The downsized GM's brands will be limited to Chevrolet, Cadillac, GMC and Buick. Its Pontiac, Saturn, Hummer and Saab operations will be either sold or closed. GM said it was finalizing a deal to sell Hummer, and plans for Saturn are expected to be announced within weeks.

GM, whose headquarters tower over downtown Detroit, said it believed the filing was not an acknowledgment of failure, but a necessary way to cleanse itself in an orderly fashion of problems and costs that have dogged it for decades.

Trading of GM shares was halted early Monday after they plunged Friday as low as 74 cents, the lowest price in the company's 100-year history. GM will be kicked out of the Dow Jones industrial average because rules established by the News Corp. unit that oversees the index prohibit it from including companies that have filed for bankruptcy.

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I'm watching CNN discuss how the "cash back" deals will be amazing for GM cars now. I don't know how all this works but IMO americans should resist buying these cars. They already took $20 billion from us. Make them crawl away, not walk away counting more cash.

(And to all those who said I was an idiot for not supporting their bailout... I TOLD YOU SO.)

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They should have done this four years ago and saved the taxpayers 20+ billion dollars.

Fixed for you.

This is a Bush/Obama problem. The previous administration propped up the failing company with TARP funds. Obama socialized it, gave sweetheart deals to the UAW and has screwed debt holders out their rightful take.

The nightmare that will rise from the ashes will be forever known as Government Motors.

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I'm watching CNN discuss how the "cash back" deals will be amazing for GM cars now. I don't know how all this works but IMO americans should resist buying these cars. They already took $20 billion from us. Make them crawl away, not walk away counting more cash.

(And to all those who said I was an idiot for not supporting their bailout... I TOLD YOU SO.)

Nobody outside of Detroit and Washington supported the their bailout. You, Me and 98% of Americans didn't want to see them get free money.

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Ted Leonsis on Chapter 11 and GM


A Perfect 11 - Ugh!

The media throws around the term Chapter 11 a lot to discuss bankruptcy and what General Motors will go through starting today. See the Wiki for a good snapshot of Chapter 11 filings. Click here.

True bankruptcy is usually in Chapter 7 where a company is liquidated. Boom. Done. It is over.

Chapter 11 is now being positioned as a big mulligan in the sky - a big reboot - a big whoops, sorry - let us start over - for big companies. This is very troubling to me. Chapter 11 is usually a bad thing for a company but now it is starting to be looked at as a good thing and that is a terrible thing.

Guess who gets the worst in Chapter 11 filings? Employees. Vendors. Creditors. True believers. I once started and ran a company that spent a lot of money on behalf of a big client - under contract - who then surprised us all by filing Chapter 11. I got stuck with the bills which I paid. I never got paid by the offending party. They just went their own way in reorganization and the newly organized company a few years later hired one of our competitors on the go forward. They got paid up front. I went to court to try and get 30 cents on the dollar. I remembered thinking “Let no good deed go unpunished” and “I can’t believe Chapter 11 was established for big companies to screw little companies.” I paid my bills to stay in business.

Many times management and customers come out unscathed in this process. They get a second chance to screw it all up again.

I am concerned that the US Government is using Chapter 11 as a positive tool for change for a company. The US Government will ultimately be a partner with General Motors. They are making Chapter 11 filing fashionable and telling consumers not to worry. This isn’t about liquidation. This is about undoing mistakes of the past; fixing cost structures; erasing bad decisions; and letting us all start over. ”No blood, no foul.” The Government won’t let GM fail but it doesn’t matter if there is a bunch of collateral damage along the way.

Employees in the Union; creditors; vendors - you may have to take one for the team but don’t worry. GM will come out of the process stronger and better for it with Government help and aid. Customers should keep buying their cars. Don’t worry. They will be in business to service you and our warranties are good.

I have never liked selected memory. This is where you can trust us - our contracts, like warranties, are sacred - and this is where our contracts aren’t worth the paper they are written upon. We will decide based on what is in our best interest not yours Mr. Partner or employee.

This use of Chapter 11 is dangerous. It shouldn’t be a positive and easy thing to consider. It shouldn’t be encouraged and looked at as a good thing. I own one GM built car. I will now have to reconsider whether I would ever buy another one again. The way this filing is being handled is offensive to me. And I bet to you, too

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Hmm just a little over a 100 days in the White House and now owns two major car companies with no experience in the private sector or any stock in either business prior to that?


Don't forget all the banks. There is even talk that Citi Group may get taken over as well.

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