A month after Chrysler declared bankruptcy, America’s biggest carmaker, General Motors came next in line to file for Chapter 11. GM has officially declared itself bankrupt in a legal filing, making it the biggest industrial collapse in U.S. history after racking up losses of $81 billion over 4 years. GM is also the 3^rd largest bankruptcy of any sort, after the investment bank Lehman Brothers and the telecommunications firm WorldCom.

However, GM will continue to manufacture and sell cars. The U.S. government is hoping for a “surgical” process to build a new, smaller GM out of its remains. GM’s chairman, Kent Kresa, described this process as a “new beginning” for the company, saying that, “A court-^­supervised process and transfer of assets will enable a new GM to emerge as a stronger, healthier, more focused and nimbler company with a determination not to just survive but to excel.”

This massive reorganization of GM would leave the U.S. government holding 60% of the company’s equity but, nevertheless, this is an essential process in order for America to sustain a feasible US auto industry. Yet still, Obama had to reiterate that the government was still reluctant about becoming a shareholder in GM, but acknowledged that to go to with the alternative, which would be to extend more loads, would be worse.

Today, GM announced that they plan to sell their Hummer brand to Chinese equipment maker Sichuan Tengzhong Heavy Industrial Machinery Co. Ltd., in a transaction that would secure more than 3,000 U.S. jobs.

Yet another question lingers in our minds as we think to ourselves, “Will GM’s bankruptcy work?” Some people believe that GM has finally made the necessary changes to be competitive but still others hold their doubts about GM’s future prospect.

Tags: bankruptcy, chapter 11, Chrysler, general motors, GM, hummer, investment bank, kent kresa, lehman brothers, obama administration, sichuan tengzhong, telecommunications, worldcom

This entry was posted on Tuesday, June 2nd, 2009 at 7:33 pm and is filed under News Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.