General Motors files Chapter 11 bankruptcy protection in court and will close 9 plants.
New York, NY(JusticeNewsFlash.com)–The world’s second-largest auto maker, General Motors (GM), filed for Chapter 11 bankruptcy protection early Monday morning. Yahoo News reports that GM’s bankruptcy case is the largest U.S. industrial bankruptcy filing, with $82.29 billion in assets and $172.81 billion in debt. Chapter 11 will aide GM in downsizing its current operations by selling assets, clearing liabilities, and restructuring the big automakers debt. The Obama administration stated the government will continue its efforts to support GM, by offering $30 billion in financing. In exchange, the government will own 60% of equity in the company. Canada has a 12.5% ownership stake in return for the $9.5 billion in government assistance Canada gave to GM. The United Auto Workers (UAW) union will have a 17.5% share, leaving 10% to unsecured bondholders.
Business litigation lawyers assert if the bankruptcy process is successful, General Motors will become a smaller company, with fewer plants, employees, and workers. GM has already announced to the public that it plans to permanently close down nine auto manufacturing plants, and leave three other plants idle. This corporate action by the big auto makers will cause a 34% reduction in GM’s work force, cutting approximately 21,000 employees. GM also plans to eliminate 2,600 of its automobile dealers. General Motors reassures customers the warranty on their motor vehicles will continue to be honored. The U.S. government states pension funds and health care benefits of employees should go on uninterrupted. GM will continue production throughout the bankruptcy process.
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