June 1, 2009

GM files for bankruptcy

General Motors Corp. filed for bankruptcy in New York Monday, as the government outlined its plans to restructure the struggling industrial giant.

President Barack Obama is scheduled to explain the plan at 11:55 a.m. in Washington. But administrative officials on Sunday explained the government would supply $30 billion in additional support and take over 60 percent of the company.

GM will 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.

A United Auto Worker healthcare fund will hold 17.5 percent of the restructured GM, while the Canadian government would own 12 percent. Creditors, owed $27 billion, will own 10 percent with an option to by an additional 15 percent.

Judge Robert Gerber of the United States Bankruptcy Court in New York will handle the case.

The government selected Alix Partners, which managed bankruptcies for Kmart and Enron, as its consulting firm.

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.

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