General Motors has finally filed for Chapter 11 bankruptcy

General Motors has finally filed for Chapter 11 bankruptcy. The bankruptcy filing is the third-largest in US history and the largest ever in US manufacturing.

The US government will extend $ 30 billion of loans to the 100-year-old automaker and plans to convert that into a 60% stake in the reorganized company.

The Obama Administration is planning for a quick sale process that would allow a much smaller company to emerge from court protection in as little as 60 to 90 days.
General Motors listed assets of $ 82.29 billion as of March 31 and liabilities of $ 172.81 billion. As the US government now assumes control of the biggest automaker in the country, President Barack Obama made it clear that the government will not be running the company day-to-day.

The Federal Government will have majority ownership position – 60% of GM will be controlled by the US government – and then 17.5% will be controlled by the retirement trust fund run by the UAW VEBA, Canada will have 12% and the bondholders who have been the focus of the story last week will have 10%.

This sale, this bankruptcy is going to be going through the same sale process that we saw with Chrysler. Today, GM will be naming the 11 plants that it plans to close; three other plants will be idled. For a lot of communities this is going to be the big story, the bad news that those plants are officially shutting down.

The government says it is committed to giving General Motors $ 30.1 billion in additional financing. When asked in a background briefing last night, about whether the government had given them anymore? It said that General Motors should have enough with $ 30 billion to make things work.

Fritz Henderson, CEO of General Motors said that this new GM will be built from the strongest parts of business, including its best brands and very finest products. The company will have far less debt, fully competitive labor costs and the ability to generate sustained and positive bottom line performance.

Reacting to news of GM filing for bankruptcy, Baba Kalyani, the Chairman and Managing Director of auto components major Bharat Forge said that the GM filing for Chapter 11 is good for companies like Bharat Forge. It will be good to do business with the good GM that will be formed after the restructuring.

Bharat Forge does not have any direct exposure to GM, and gets revenues of $ 10-12 million by supplying to the US auto giant’s Tier-I vendor.

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