General Motors files for bankruptcy

General Motors filed for bankruptcy this morning.

The Chapter 11 filing represents the largest corporate bankruptcy in history, and it was precipitated by federal government threats to cut off loans to the company if it didn’t meet specific restructuring goals. (Learn how bankruptcy works.)

With this move, the federal government now deems GM’s plan viable and will provide an additional $30 billion into GM to keep the company afloat through the bankruptcy process. The government is expected to own 60 percent of the new company. The governments of Canada and Ontario will lend $9.7 billion and take on 12 percent of the new GM.

As part of the further restructuring, General Motors will close 11 facilities and idle another three. However, GM is committed to building a new small car in an idled UAW factory, increasing the production percentage of American-made models sold in the United States from about 66 percent to over 70 percent.

Under the bankruptcy plan proscribed by the Treasury Department, GM is expected to emerge from bankruptcy quickly, in about 60 to 90 days, while some unprofitable GM divisions, including Hummer, Pontiac, Saturn, and Saab will be closed or sold off. The new, leaner GM expected to emerge from bankruptcy will include the Buick, Cadillac, Chevrolet, and GMC brands. The company will close about 18 percent of its dealerships.

Should the bankruptcy be similar to Chrysler’s Chapter 11 process, there may be concerns for consumers being left without recourse from the company for product defect, personal injury, or “lemon” claims. Consumers Union recently wrote a letter to the federal Autos Task Force urging the Treasury Department to make sure legitimate consumer claims do not become a casualty of the bankruptcy process.

To get answers to the most common questions and concerns about Chrysler’s and GM’s bankruptcy, check out our Auto Crisis hub.

—Eric Evarts and Jeff Bartlett

Comments

[Lynn]

Its really hard for me to decide where I stand on this. I understand why they are getting government funding, because they employ a lot of people, but maybe, if GM was so mismanaged as to reach this situation - maybe its time for it to disappear completely

[End of Era]

An end of an era for sure. Too bad we couldn't have ended it last September before dumping billions of our dollars into this obvious black hole this was then and now before power-hungry politicians got a hold of this. Too bad taxpayers will now be subsidizing crappy cars produced by our friendly Government Motors for years to come through tax subsidies and GM consumer tax credits. Too bad we the people have allowed our elitist leaders in D.C. to run over us, our liberties, and our freedoms the last several years (Bush) and months (Obama). An end of an era to be sure.

At least liquidation deals abound. Sigh.

[Stanley]

The government should not touch this. Keep taxpayers out of this losing investment. I will NEVER buy a GM vehicle as long as the company is government owned.

[HandsOff]

The government needs to keep their stupid, fat fingers out of businesses. If a business can't operate on its own, then it closes up and goes away. End of story.

[alma penley]

i would never buy a gmc auto again. i bought a 1999 cadilac 4 years ago with 41,000 miles . at 44,000 i had to have new torque converter in transmission.cost me $2,200.at 74,000 miles startes running hot put new themostat new radiator. then i find out after a shock test from dealership i have a beautiful car with low miles but i have to have new motor $7500.if they can't build a car to last longer than that no wonder they are bankrupt.think i will buy a honda or toyota.