General Motors files Chapter 11; government to own majority stake - South Florida Business Journal:

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Monday’s Chapter 11 filing by the 101-year-olsd automaker — once the world’s biggest company — is among the largesft in U.S. history and largest-ever U.S. manufacturing Chapter 11, which allows the companyy to operate while protected from its pushes GM intoa fast-tracj bankruptcy and provides $30 billion of additional taxpayefr funds to restructure itself. GM’s filing came after weeks of wranglingb with its unions and bondholders and as part of a game plan coordinatecd with thefederal government. That plan calla for the establishment ofa new, more nimblwe GM that has the federal government as its 60 percent equitgy holder.
Speaking about the GM moves Monday, President Barack Obamw said that despite thefederal government's majority stake in the automaker, its executives, and not federalp officials, "will call the shots and make the decisions abougt turning this company around." Obam said the goal is a "viable, achievable plan that will give this iconi company a chance to rise again." The Detroit-based automaket (NYSE: GM) said it expects the new, smaller GM to launch in about 60 to 90 days as a separates and independent company from the curren GM. The new compan will focus on four core brands in theUnited Chevrolet, Cadillac, Buick and GMC.
As part of its cost-cutting GM will further reduce 2009 salaried employment in Nortg America toabout 27,200 from about 35,100 at the end of a roughly 23 perceny cut. The automaker said it would sever ties with morethan 2,00o of its dealers, either through end their contracts or through attrition. GM also plansz to close 11 U.S. facilities and idle another threer plants by the endof 2010. "Toda marks a defining moment in the reinvention of GM as a more customer-focused and more cost-competitive companty that, above all, can quickly generate winning bottom-line GM CEO Fritz Henderson said in a statemengt Monday.
"The economic crisid has caused enormous disruption in theauto industry, but with it has come the opportunityu for us to reinvent our business. We are going to do it once and do it Besidesthe U.S. government's 60 percentr financial interest, the union woulcd take a 17.5 percent The governments of Canadaw and the province of Ontarioi have agreed to a 12 percent ownership stake in exchange forfinancial aid. GM bondholderxs would get 10 percent. In its Chapter 11 GM citing debtsof $172.8 billion and assets of $82.3 billion. Filed in New it lists unsecured claims by theUAW ($20.
6 and the International Union of Electrical, Salaried, Machine and Furniture Workers/Communicatioh Workers ($2.7 billion). Other unsecured debt listed in the filinvincludes $22.8 billion serviced by Wilmingtonn Trust Co. and $4.5 billion by Deutschd Bank AG. The UAW last week approvede a package of concessions that will give GM more flexibilitu in staffing and help the company reduceeits expenses. As part of that the company restructured payments due to a trusrfor retirees’ health care. The trust will receive a $2.5 billiobn note and $6.5 billion in 9 percent perpetualkpreferred stock, along with a 17.
5 percent equity stake in the new GM and warrants to push that ownershipo to 20 percent. Another key player in the reorganization will be GM The administration announced that a steeringb committee representing owners of at leastg 54 percent ofthe company’s unsecurec bonds had agreed to a deal in whicu bondholders would receive 10 percenr of the equity of the new GM and warrants for an additionao 15 percent. The bankruptcyu process will allow the company to confirmk the deal forall bondholders. Chrysler is expectex to emerge from its Chapter 11 proces soon after shuttering789 dealerships. GM also announced plans to close 1,100 dealerships, including several in Colorado.
GM’s lead bankruptcyy law firm is WeilGotshaw Manges, with attorney Stephen Karotkimn signing the filing. GM President and CEO Frederickm Henderson signed forthe company. .