General Motors Files for Chapter 11 Bankruptcy

June 5, 2009 by Matt Placek

On Monday, the automotive giant General Motors filed for Chapter 11 bankruptcy. With this move, GM became the second largest industrial bankruptcy in United States history according to the Wall Street Journal. The bankruptcy is estimated to cost the American public somewhere around $100 billion. In a statement released on Monday, GM’s Board of Directors stated that they regret that this path proved necessary despite the best efforts of so many, and are confident that GM will emerge from bankruptcy as a stronger, healthier, and more focused company.

In exchange for bankruptcy the U.S. government will own 60% of the new GM, the Canadian government will own around 12%, while United Auto Workers and private investors will own the final 28% according to the Associated Press.

Along with the announcements of filing for Chapter 11 bankruptcy, America’s largest automaker also announced that they will close 17 factories and cut more than 20,000 jobs in at least four states by the end of 2011. On Tuesday, GM announced plans to sell the rights to the Hummer brand to the Chinese company Sichuan Tenzhong Heavy Industrial Machinery. The automaker claims this transaction will save around 3,000 American jobs. GM also plans to sell European subsidiary Opel to an undetermined buyer.