Auto News Blog

The largest car manufacturer in the United States declares bankruptcy as the market opens morning of June 1. The federal comes to the rescue with a $30.1 billion funding to help one of the pillars of the American auto industry through the tough times.

The good assets of the company will end up and be owned by the bond holders, UAW, Canadian government, and the U.S. Treasury Department. The move will give way to the restructuring of the company. Some of the old assets like factories, brands, and dealerships will be under supervision of the court, be closed or be sold.

The U.S. government will be having a 61% stake of GM. Canada and the government of Ontario will get a 12% share in exchange of a $9.5 billion funding.

The bankruptcy is seen by the Obama administration as a way for the car company to rise again from its neck deep financial woes.

The sales of GM have been on a drop looking at the records for the past several decades. The knockdown punch was brought by the global credit crunch last fall forcing the company to ask for more loans and look for other means to survive.

GM will be closing down around 11 assembly plants and hibernate three more as they restructure. The brands like Saturn, Saab, and Pontiac will either be closed or sold. Opel has been sold and Hummer might follow suit soon.

The chapter 11 filing is set to help the company start with a clean sheet off its debts. Our friends over at the GM Auto Blog have more corporate GM news, pay them a visit!