CAR giant General Motors (GM) finally filed for Chapter 11 yesterday, as President Barack Obama said his government’s plan for the carmaker was viable and would see the business rise out of bankruptcy quickly.
When GM emerges from the largest-ever bankruptcy filing in US manufacturing history, the debt-heavy company will be majority owned by the US government.
Obama’s administration will pump an extra $30bn into the moribund carmaker in an effort to reshape the group.
“Our goal is to get GM back on its feet, take a hands-off approach and get out quickly,” Obama said.
GM’s shares were removed from the Dow Jones industrial average and delisted by the New York Stock Exchange as “no longer suitable for listing.” GM’s chief executive Fritz Henderson signed the filing.
AL Koch, turnaround specialist and managing director of AlixPartners, the restructuring company, will be the chief restructuring officer for GM. Alix says it has helped restructure over 42 manufacturers and 1,323 suppliers.
The filing came as a bankruptcy judge approved the sale of almost all of rival carmaker Chrysler’s assets to Italian company Fiat.
Chrysler’s bankruptcy, also financed by the US Treasury, has been widely seen as a test run for the much bigger and more complex reorganisation of GM.
Meanwhile in the UK, business secretary Lord Mandelson will meet with Magna International – the Canadian car parts maker which will buy the European arm of GM – within days, to hammer out the details of how it intends to protect UK jobs, it emerged yesterday.
Mandelson has said repeatedly that he has had “reassurances” from Magna that it would not take Vauxhall production out of the UK.
But fears have been growing that Magna’s acquisition will lead to job losses at the plants in Ellesmere Port and Luton.
Mandelson has been under fire from unions, who accuse him of doing too little too late to save the positions.
But the business secretary hit out at the union leadership, saying it had ignored his attempts to gain assurances over the future of jobs in the UK.
Joint general secretary of Unite Tony Woodley said he wanted Mandelson to be involved in weekend talks with GM Europe, where the future of Vauxhall and Opel was discussed, along side his German counterparts.
THE FALL OF GENERAL MOTORS
GM’s chief executive Rick Wagoner, Chrysler chief executive Robert Nardelli and Ford chief executive Alan Mulally testify before the House Financial Services Committee in a bid to secure a $25bn (£17bn) loan to prop up the car industry.
19 December 08
The US administration announces a $17.4bn lifeline to two of the three Detroit carmakers from the $700bn Troubled Asset Protection Scheme (Tarp). GM is set to receive $13.4bn and Chrysler $4bn.
17 February 09
GM, along with Chrysler, asks for another $22bn of extra funding from the US administration.
29 March 09
As GM continues to struggle, Rick Wagoner stands down as chief executive. He’s not the only heavyweight to lose his position – Peugeot Citroen fires its chief executive Christian Streiff.
24 April 09
GM takes another $2bn of government aid as it strives to stave off collapse.
27 April 09
GM offers its final plan to reorganise outside bankruptcy by slashing bond debt, cutting a further 21,000-plus US jobs and emerging as a nationalised carmaker under majority control of the US government.
31 May 09
Investors holding about 54 per cent of GM’s $27.2bn of bonds indicate support for a US Treasury-brokered swap that may help fast-track bankruptcy.
1 June 09
GM files for Chapter 11.