GENERAL Motors will file for Chapter 11 bankruptcy early today in the US, marking the humbling of an American icon that once dominated the global car industry and setting up a high-stakes gamble for US taxpayers.
The question now facing 56,000 auto workers, 3600 GM dealers and the Obama administration is this: Will it work?
The Government, which will own a majority of the company, is wagering upwards of $US30 billion ($37.4 billion) that it can return GM to profitability, reversing a decades-long decline by shearing away liabilities and creating a freshly competitive car-maker by the end of the northern summer.
The reorganisation faces myriad risks, ranging from legal challenges to the uncertainty of when consumer demand for new cars will rebound. In becoming GM's new owner, the Government is also entering largely unexplored terrain filled with political minefields, notably the possibility of meddling by Congress in the company's daily operations and business plans.
Obama team confident of returning GM to profitability
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UPDATE: Kevin Helliker | June 01, 2009
Article from: The Wall Street Journal
GENERAL Motors will file for Chapter 11 bankruptcy early today in the US, marking the humbling of an American icon that once dominated the global car industry and setting up a high-stakes gamble for US taxpayers.
General Motors headquarters, Detroit
Unknowns: The reorganisation at GM faces myriad risks, including legal challenges and the uncertainty of when consumer demand for new cars will rebound. Picture: Bloomberg
The question now facing 56,000 auto workers, 3600 GM dealers and the Obama administration is this: Will it work?
The Government, which will own a majority of the company, is wagering upwards of $US30 billion ($37.4 billion) that it can return GM to profitability, reversing a decades-long decline by shearing away liabilities and creating a freshly competitive car-maker by the end of the northern summer.
The reorganisation faces myriad risks, ranging from legal challenges to the uncertainty of when consumer demand for new cars will rebound. In becoming GM's new owner, the Government is also entering largely unexplored terrain filled with political minefields, notably the possibility of meddling by Congress in the company's daily operations and business plans.
Even if a new GM emerges swiftly from bankruptcy, the administration will face a thicket of challenges, including closing more than a dozen factories and shedding the Pontiac, Saturn, Saab and Hummer brands. Shepherding these unwanted parts of GM - the so called Old GM - through liquidation in court could take years, with potential extra costs to taxpayers if the process bogs down.