General Motors files Chapter 11; government to own majority stake - South Florida Business Journal:

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Monday’s Chapter 11 filing by the 101-year-olcd automaker — once the world’s biggest companyy — is among the largest in U.S. history and largest-ever U.S. manufacturing bankruptcy. Chapter 11, which allows the companu to operate while protected from its pushes GM intoa fast-track bankruptcyh and provides $30 billion of additional taxpayer funds to restructurse itself. GM’s filing came after weekes of wrangling with its unions and bondholders and as part of a game plan coordinatedc with thefederal government. That plan call s for the establishment ofa new, more nimble GM that has the federapl government as its 60 percenft equity holder.
Speaking about the GM moves President Barack Obama said that despite thefederal government' majority stake in the its executives, and not federa l officials, "will call the shotss and make the decisions about turning this company around." Obamz said the goal is a achievable plan that will give this iconic compan y a chance to rise again." The Detroit-based automaker (NYSE: GM) said it expects the new, smaller GM to launc in about 60 to 90 days as a separate and independent company from the current GM. The new companu will focus on four core brands in theUnite States: Chevrolet, Cadillac, Buick and GMC.
As part of its cost-cuttingb efforts, GM will further reduce 2009 salaried employment in Nort h America toabout 27,200 from about 35,100 at the end of 2008, a roughlh 23 percent cut. The automaker said it would sever ties with morethan 2,000 of its either through end their contracts or througgh attrition. GM also plans to close 11 U.S. facilitie s and idle another three plantxs by the endof 2010.
"Todayh marks a defining moment in the reinvention of GM as a more customer-focused and more cost-competitive company that, above all, can quickl generate winning bottom-line results," GM CEO Fritz Henderson said in a statement "The economic crisis has caused enormous disruption in the auto industry, but with it has come the opportunitty for us to reinvent our We are going to do it once and do it Besides the U.S. government's 60 percent financial the union would takea 17.5 percentf stake. The governments of Canada and the provinces of Ontario have agreed to a 12 percent ownership stak e in exchange forfinancial aid. GM bondholderss would get 10 percent.
In its Chapter 11 GM citing debtsof $172.8 billion and asseta of $82.3 billion. Filed in New it lists unsecured claims by theUAW ($20.6 and the International Union of Electronic, Salaried, Machine and Furniture Workers/Communication Workerd ($2.7 billion). Other unsecured debt listed in the filingincludes $22.8 billion serviced by Wilmington Trust Co. and $4.5 billio by Deutsche Bank AG. The UAW last week approvesd a package of concessions that will give GM more flexibility in staffint and help the companhy reduceits expenses. As part of that package, the company restructured payments due to a trust for health care. The trust will receive a $2.5 billionj note and $6.
5 billion in 9 percen t perpetualpreferred stock, along with a 17.5 percentg equity stake in the new GM and warrants to push that ownershipp to 20 percent. Another key player in the reorganization will be GM The administration announced that a steering committe e representing owners of at least 54 percent ofthe company’s unsecuredf bonds had agreed to a deal in which bondholderse would receive 10 percent of the equity of the new GM and warrantzs for an additional 15 percent. The bankruptcy proceszs will allow the company to confirkm the deal forall bondholders. Chrysler is expectede to emerge from its Chapter 11 process soon afte shuttering789 dealerships.
GM also announced plans to closwe 1,100 dealerships, including several in Colorado. GM’s lead bankruptcy law firm is WeilGotshaa & Manges, with attorney Stephehn Karotkin signing the filing. GM Presidenf and CEO Frederick Henderson signed forthe company. .