GM Files for Bankruptcy; Expects to Form "New GM" within 60-90 Days
June 1, 2009

General Motors (GM) filed for bankruptcy today under Chapter 11 with plans to implement a "363" asset sale agreement to "the New GM." The company expects the New GM to be launched within 60 to 90 days as a separate and independent company, which will purchase substantially all of the global assets of GM.

According to a statement issued by GM today, the company plans to pay its essential suppliers, which have not yet been named, "in the normal course," and will close or idle 13 plants by the end of 2010, with one more scheduled to close/idle by 2012. As part of the plan, President Obama also announced that the United States would be investing an additional $30 billion in the company, giving it a 60-percent stake in the company. However, Obama noted that the government does not intend to be involved in the running of the business.

"We're acting as reluctant shareholders because that is the only way to help General Motors succeed," President Obama said during a White House briefing this morning.

A board of directors will run the New GM.

"They, and not the government, will call the shots about how to turn this company around," he said. "When a difficult decision has to be made, the New GM, not the U.S. government, will make that decision."

Obama pointed to Chrysler's bankruptcy filing, and its resulting agreement with Fiat, as an example of the possible positive that can come from the process.

"What the completion of this [Chrysler/Fiat] alliance means is that tens of thousands of jobs that would have been lost had Chrysler liquidated will now be safe," he said. " … Many experts said a quick, surgical bankruptcy was not possible. They were wrong."

GM president and chief executive officer Fritz Henderson also pointed to hopes for a speedy restructuring as the new company is formed through today's bankruptcy filing-and the emergence of a stronger "product-driven" company.

"What was and is the most important thing to do is to get to our destination, to restructure General Motors permanently and to get there fast," Henderson said at a press conference this afternoon.

The "New GM" will focus on four core brands in the United States: Chevrolet, Cadillac, Buick and GMC. Each will have fewer models with in the brand, with more of a focus on product launches.

"We need to make sure that all of our products are world-class, and that will be our goal going forward," Henderson said. "We need to make sure that every one of our launches is an outstanding car to drive."

"This is not the end of GM, but the start of a new and better chapter," Henderson added.

CLICK HERE for GM's bankruptcy filing.

CLICK HERE for a full list of GM plant closings.

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