This is what happens. Its a surprise to me that this didn't happen much earlier.
General Motors filed for bankruptcy today, forcing the 100-year-old automaker once seen as a symbol of American economic might into a new and uncertain era of government ownership.
The filing is the third-largest in U.S. history and the largest-ever U.S. manufacturing bankruptcy. The company listed $82.29 billion in assets and $172.81 billion in debts.
The decision to push GM into a fast-track bankruptcy, and provide $30 billion of additional taxpayer funds to restructure the automaker is a huge gamble for the Obama presidency.
But in a sign of progress in the government's high-stakes effort, a bankruptcy judge approved the sale of substantially all of U.S. automaker Chrysler's assets to a group led by Italy's Fiat S.p.A. in an opinion filed late on Sunday.
Chrysler's bankruptcy, also financed by the U.S. Treasury, has been widely seen as a test run for the much bigger and more complex reorganization of GM.
President Barack Obama is due to speak on the auto industry shortly before noon Eastern time today. A news conference by GM CEO Fritz Henderson will follow.
The GM plan as detailed by U.S. officials is for a quick process that would allow a much smaller GM to emerge from court protection within 60 to 90 days.
'The hard part'
"Now the hard part begins, which is making GM and Chrysler competitive. If they don't do that, then we'll be doing this all over again in a few years," said Christopher Richter, auto analyst at CLSA Asia-Pacific Markets in Tokyo.
"The immediate implication is that the companies are going to get smaller and so market share is up for grabs, which means that rivals like Toyota, Honda, Nissan and Hyundai are going to gain share."
Since the start of the year, GM has been kept alive with U.S. government funding as a White House-appointed task force vetted plans for a sweeping reorganization that will be undertaken with $50 billion in government financing.
By preparing to take a 60 percent stake in a reorganized GM, the Obama administration is gambling that the automaker can compete with the likes of Toyota Motor Corp. after GM's debt is cut by half and its labor costs are slashed under a new contract with the UAW.
The governments of Canada and the province of Ontario agreed to provide another $9.5 billion to GM in a late addition to the plans for the bankruptcy that have been taking shape for weeks, U.S. officials said.
GM plans to close 11 U.S. facilities and idle another three plants. It has not provided an updated target for job cuts but had been looking to cut 21,000 factory jobs from the 54,000 UAW workers it now employs in the United States.
The UAW would have a 17.5 percent stake in the "new GM." The Canadian government would own 12 percent stake and GM bondholders would get 10 percent.