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AutoBlog: REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named

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Filed under: Government/Legal, GM, Earnings/Financials


General Motors' bankruptcy endgame appears to be at hand, with word coming out that the automaker will indeed file for Chapter 11 protection early on Monday morning, which in turn is expected to trigger $30.1 billion in U.S. government loans. That funding will arrive on the heels of the $19.4 billion GM has already received since late last year, and Canada is expected to chip in an additional $9.5 billion. In exchange for that $30.1 billion in financing, Capitol Hill will receive a 60% share of GM, while Canada's investment will reportedly net it a 12% stake.

In related news, Automotive News is reporting that GM will appoint Al Koch to a newly created chief restructuring officer post. Koch, a corporate turnaround expert, has already been working with GM since January through his advisory firm, AlixPartners LLP. According to AN, Koch will oversee "bad" GM - that is, the liquidation of assets deemed to be dead weight in the drive to a leaner, more competitive GM (think: Hummer, Saturn, Saab, etc.). Recently minted GM CEO, Fritz Henderson, will continue to lead the corporation.

As part of the Chapter 11 bankruptcy proceedings, GM will see its stock-trading ticker removed from the Dow and S&P 500 on Monday, with those who have still been stubbornly holding on to stocks effectively losing everything.

President Obama will address the nation on GM's historic bankruptcy beginning at 11:55 a.m. EDT, with Fritz Henderson slated to address media members at around 12:15 p.m. in New York.

[source: Automotive News - subs. req. | Image: Bill Pugliano/Getty]

REPORT: GM to declare bankruptcy before markets open, chief restructuring officer named originally appeared on Autoblog on Sun, 31 May 2009 23:29:00 EST. Please see our terms for use of feeds.

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I'm sad, I have a knot in my stomach and I'm speechless.

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Very sad, General Motors has been America's hood ornament for 100 years, the realization that bankruptcy is here for such an icon of America is another somber reminder of how far America and our industrial economy have fallen. GM brass should hang tomorrows newspaper headline up in their offices as a future reminder of the importance of staying competitive all the time, the importance of not simply surviving but thriving in the most competitive market GM has ever known. Much like the start of post war production and the gas shortages of the early 70's, this current economic environment will go down in history as a defining moment in automotive history.

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