Where: Detroit, Michigan, USA
July 10, 2009 : The USA’s biggest carmaker, General Motors, had declared bankruptcy on June 1, 2009. When a company is unable to repay its debts to creditors, it can seek legal protection by filing a bankruptcy plea. The action also ensures that all creditors are repaid in equal measure. The case of General Motors (GM) is the largest bankruptcy filing by an industrial company in the USA’s history. The corporation won a second chance to prove itself profitable as it came out of bankruptcy at lightning speed.
President Obama had predicted that reforming GM would take 60 to 90 days. However, it only took a month and 10 days. There was a good deal of financial restructuring of the company. Lawyers prepared papers that signed over its factories, stocks, equipment and intellectual property to a new corporate entity controlled by the US government.
The government of the USA now owns 60.8 per cent of the new GM. Canada’s government holds 11.7 per cent and a union-controlled pension fund has 17.5 per cent holdings. Creditors of the old company had $27 billion owing to them. They were compensated with a share of just 10 per cent, to their disappointment. The GM chief executive, Fritz Henderson, promised to pay back $50 billion of public loans well before the deadline of the year 2015. He also said that the company, which now employs a smaller workforce, would focus on four vehicle brands – Chevrolet, Cadillac, Buick and GMC. The company will also work on developing environmentally-friendly vehicles. The electrically powered GM Volt is due to be launched by the end of next year.