June 1, 2009

GM to file for bankruptcy Monday

Administration officials said General Motors Corp. will file for bankruptcy in New York Monday and emerge sharply reduced and 60 percent government-owned.

The company will likely be removed from the New York Stock Exchange, its stock, worth $93.62 a share in 2000, rendered worthless, the Detroit Free Press reported.

GM will absorb an additional $30 billion in taxpayer funds and cut 21,000 union jobs, close at least 12 factories and 40 percent of its 6,000 dealerships as part of the plan, The New York Times reported.

President Barack Obama is scheduled to explain the plan at 11:55 a.m. in Washington.

GM will pay back $9 billion out of a total $50 billion in U.S. government loans and $1.7 billion out of $9.5 billion in loans from Canada, which will own 12 percent of GM, The Detroit News said.

Obama will outline a hands-off management style, leaving Chief Executive Officer Frederick Henderson and other top executives in place.

The United Auto Workers union will exchange half a $20 billion health care obligation for company stock, while bondholders, owed $27 billion, will accept 10 cents on the dollar in exchange for 10 percent of the company with an option to buy an additional 15 percent in the future.