General Motors has filed for bankruptcy protection after more than 100 years in business, signalling the biggest industrial failure in US history.
The move has long been on the cards for GM amid collapsing sales figures. President Barack Obama said bankruptcy protection would allow the company to reorganise and one day return: “Working with my auto task force, GM and its stakeholders have produced a viable, achievable plan that would give this iconic American company a chance to rise again. It’s a plan tailored to the realities of today’s auto market. A plan that positions GM to move toward profitability even if it takes longer than expected for our economy to fully recover,” Obama told a press conference in Washington. Bankruptcy protection means GM will be given time to restructure while continuing to trade, all the while protected from its creditors. It is expected that GM will come out of bankruptcy protection in two to three months but will be a much smaller version of its former self. It will have to make an estimated 20,000 US job cuts and the American government will own a 60 percent stake in the ‘New GM.’ There is some cause for hope. A judge has today given the all clear to the sale of rival car-maker Chrysler- which is also in bankruptcy protection- to Fiat. That could pave the way for GM to sell off, take stock and start over.