Finance Review

US-based automobile major General Motors has filed Chapter 11 bankruptcy protection. GM, reeling under the financial crisis that has severely affected banks and automobile companies in the US, has listed assets of USD 82.29 billion as of March 31 and liabilities of USD 172.81 billion. The company’s largest unsecured creditors included creditors including Wilmington Trust Company and the United Auto Workers (UAW), it said.

GM filed for Chapter 11 bankruptcy today and now begins the process. They are going to move very quickly and General Motors will be split into two companies. The old assets – the bad assets, are going to stay in bankruptcy court. The new company the one that has Chevy, Cadillac – the good assets – that process will begin immediately.

When the new General Motors emerges in the next 60-90 days here is what the ownership stake is going to look like.

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 USD 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 USD 30 billion to make things work.

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