June 2, 2009
America’s biggest carmaker, General Motors, yesterday declared itself bankrupt with debts of $172bn (£105bn) in a move paving the way for the Obama administration to take control of a 101-year-old stalwart of the US manufacturing industry.
[efoods]GM filed for chapter 11 protection from its creditors at a federal courthouse in downtown Manhattan at 8am local time, kicking off the largest industrial insolvency in US history.
The owner of brands such as Chevrolet, Cadillac, Buick and Vauxhall will continue manufacturing and selling cars, while a New York bankruptcy judge, Robert Gerber, scrutinises its future.
Under a rescue plan put forward by the White House, the US and Canadian governments will pump $30bn of taxpayers’ money into GM in return for a 70% equity stake – a move Republicans angrily criticised as a political power grab of a vast industrial company.
In a televised address, Barack Obama warned there will need to be deep sacrifices to keep GM afloat. As he spoke, GM, which employs 235,000 people globally, announced 14 of its 47 car factories in the US will shut by the end of 2011.