GM files for bankruptcy protection

31 May 2009

01 June 2009 | Martha McKenzie-Minifie

General Motors (GM) filed for Chapter 11 bankruptcy today, just weeks after fellow embattled US carmaker Chrysler took similar steps.

US President Barack Obama is expected to make an announcement later today. The White House released partial details of the bankruptcy last night after negotiations between US government representatives and GM's board.

The US government would reportedly provide GM a further $30.1 billion (£18.4 billion) on top of the $19.8 billion (£12.1 billion) already lent to the company, and in return receive a 60 per cent equity stake in the GM that emerges from bankruptcy.

Details of the long-term repercussions for suppliers are yet to be decided but GM said in a statement: "Essential suppliers will be paid in the normal course."

Last week, financial newswire Bloomberg reported payments in bankruptcy court for old bills would only "cushion the blow" of lost business for parts makers as GM scaled back.

SMjun2009

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