It’s official: General Motors is bankrupt
June 2, 2009 by Alborz Fallah
After months and months of speculation and “it’s only a matter of time”, America’s largest vehicle manufacturer has been approved by U.S. Bankruptcy Judge Robert Gerber for interim bankruptcy financing of $15 billion USD to cover the next three weeks and allow GM the benefits of Chapter 11 protection.
The 100-year-old manufacturer’s bankruptcy is the third-largest filing in U.S. history. Only beaten by Lehman Brothers Holdings Inc.’s in 2008 and WorldCom Inc.’s in 2002.
The U.S. government has pledged up to $30.1 billion USD to restructure the company and provide the financing for it to emerge within the next two to three months. The Canadian government will also assist as a part of the debtor-in-possession funds.
As part of the deal, GM has asked the bankruptcy court to approve rules for the asset sale of GM largely to the U.S. government.
Fortunately for dealers, GM will continue paying incentives even while it remains in bankruptcy. The company sees the payments as critical not only to the dealers expected to continue with GM, but also to those that GM intends not to keep.
At one stage during the Bankruptcy hearing a GM counsel said the company intends to continue payment of payroll, however it has pledged that no employee would fly first-class during the bankruptcy restructuring, but announced no such prohibition to flying by corporate jet. That prompted an angry response from Judge Gerber, who said “careers and livelihoods hang in the balance during the proceeding”.
Our team is currently at a press conference with GM Holden. Please check back again soon for specifics as to how this situation will affect Holden.
Print it: 
See you later and please take Holden with you.
You have to love Michael Moore’s take on GM’s current woes:
“It is a sad irony that the company which invented ‘planned obsolescence’ – the decision to build cars that would fall apart after a few years so that the customer would then have to buy a new one — has now made itself obsolete.”
And:
“”Beginning in the 1980s, when GM was posting record profits, it moved countless jobs to Mexico and elsewhere, thus destroying the lives of tens of thousands of hard-working Americans,” he wrote.
“The glaring stupidity of this policy was that, when they eliminated the income of so many middle-class families, who did they think was going to be able to afford to buy their cars?”
All those billions just goneeee…
All the top execs past and present should be held accountable, but we all know they will get jack done to them.
And holden is an important part for us in oz high horser, alot of things will be affected not just the auto industry.
Holden to become a fully imported car company? Holden just wouldn’t be able to make a car cheap enough in Australia without heavy government subsidys. Cruize will always be made in Korea and i bet if we keep a Commodore sized car it eventually might be built in China.
Reuss said this hours ago High Horser………..
“The Australian arm of the beleaguered company has posted no job losses despite the downturn, Mr Reuss said, with pay cuts taken “across the whole organisation”.
“We have worked over the last 18 months and taken all the necessary steps in the global financial crisis to make sure Holden here in Australia is cash-flow positive, is viable and has a great revenue stream set up here for our new products that we’re beginning to introduce,”
“We are part of the new GM parent company but more importantly we have a future here in Holden that we feel very, very good about.”
He said the company had structured operations in “a very responsible way” sparking a line production with demand, following the industry’s decline by up to 20 per cent in Australia.
Mr Reuss said he had worked closely with federal and state governments, unions and headquarter staff to take important decisions, including the development of alternative fuel technology, and a new small car design due for manufacture in Adelaide from 2010.
He said the company did not expect any job losses in the immediate future.
“We’re very well positioned here for any upswing in the economy and in fact, I think you’ll see this last month we’ve had start to have a little bit of rebound on local demand,” he said.
“We’re in a good place.”
And yesterday Obama’s own Democratic colleagues in Ohio said:
‘“It is unacceptable to ask U.S. workers to subsidize the exportation of their own jobs,” said Representative Dennis Kucinich, Democrat of Ohio, whose district includes Cleveland. “The taxpayers’ investment should be used to protect American plants so that American workers can build the next generation of automobiles.”
And today Obama said that it was not the intention for US taxpayers money to be used to sustain jobs outside the US:
“US taxpayers’ dollars should stay within the US and it is not intended for taxpayers’ dollars to go offshore”.
The US realpolitik about the future of GM’s overseas operations is just beginning. The political pressure on Obama to cut it off will be enormous.
BM, that doesn’t mean that the bankruptcy judge, who’s job is to decide how the debtor-in-possession (ie the US Government) money will be spent to rebuild GM, won’t turn around and tell GM to sell off Holden. In bankruptcy, GM has no say as to what it gets to keep and what it doesn’t. Its all up the the bankruptcy judge, on behalf of the debtor-in-possession, which is the predominately the US and Canadian Governments who have forked out all the money for GM’s bankruptcy.
Why is everyone getting wrapped up around the axel of GM’s bankruptcy. Holden is an Australian company and is independent of GM, the biggest affect this will have on Holden is possibly having to source motors from other then America.
I found it funny that Garth Tander sent his weekend win out to “the guys at Holden who have been doing it tough”.
I thought it was a strange mention from someone on his end of the stick. No doubt there is pressure right down the line.
Personally I believe Holden can be a viable company, but dont be fooled because behind Mark Reuss’ words he would really be shitting himself.
At worst, Holden will be removed from GM in an Opel type separation, which doesnt always mean the worst.
At the end of the day, they will live on.
We are now seeing the end of the GM that we once knew.
Selling off and culling major manufacturing components from the GM stable will see tham take a massive slide down the global sales ladder.
We could see GM cut in half in terms of size.
Makes one less for hyundai and VW to pick off on their race to the top.
It will be kinda like a Steve Bradbury style win for them ha ha ha
Smokin
Its a little deeper than that.
Holden effectively becomes an orphan
Smokin’
Holden are a GM subsidiary. A large chunk of their cash comes from the mothership, GM. Holdens R&D budget is about to shrink drastically, and there’s every possibility that they’ll end up in chinese hands, should GM be forced to Sell.
Considering Holden hasn`t made a profit since 2004 and racked up 300 miliion in debt I`d say they will definitely be effected at some point
Smokin’
Holden, as a car manufacturer, is and always has been, fully owned by GM.
Holden, the Australian owned company never ever made one single complete car.
This is great news for the world. Holden will be next.
Quote “Does this mean Holden is going out of business?
No. None of GM’s operations outside of the US are included in the US court filings or court- supervised process, and these filings have no direct impact on GM’s plans and operations outside the US.”
Perhaps some of you should read the new thread on FAQ before you go off on your negative tangents……..
THE FACTS PLEASE Says:
June 2nd, 2009 at 2:36 pm
Quote “Does this mean Holden is going out of business?
No. None of GM’s operations outside of the US are included in the US court filings or court- supervised process, and these filings have no direct impact on GM’s plans and operations outside the US.”
The facts, you are assuming that the dribbling 15 years olds that post blogs here can read! Most of the comments (above) are from people with NO idea about the topic at hand. The morons that say “please take Holden with you’ and so on are just total 100% morons! Yeah right. 6′000 people at Holden loose their jobs. Another couple of thousand at dealerships go. Then the 40′000 odd in the supply industry loose. Mass bankruptcy’s in supplier and dealerland. All of our taxes go up to pay the unenployment benefits. On top of this will be a huge negative effect on Ford and Toyota localy manufacturing cars. Both have stated clearly that they rely on Holden’s volume to sustain a viable local supplier network. But then if you are in school you won’t care or you are too stupid to understand this anyway
EH179driver,
You should read the documents filed in the New York Court; they can be found online. Anyone with insolvency experience can see how this will unfold for GMH.
Your confidence is very misplaced.
Link to a strong piece from today’s New York Times that explains GM’s fate:
http://www.nytimes.com/2009/06......html?_r=1
So does that mean it would have been better for General Motors to have gone bankrupt like months ago? Instead of burning up millions of cash? Doesn’t make sense
This news is like Cristmas,Everybody knew it was coming but I doubt its the end for GM.I agree Mumble Duck does that mean the bailout was a waste of taxpayers money???Probobly.
1 June 2009 HOLDEN OPERATIONS UNCHANGED BY PARENT COMPANY ANNOUNCEMENTS IN US
Holden to be part of New GM
Holden not included in US filing under chapter 11;
No direct impact on local design, engineering and manufacturing operations;
Technology improvements to best-selling Commodore, introduction of second carline remain on track;
No changes to Holden employees and supplier payment arrangements; and
No changes to Holden dealer and warranty arrangements.
Holden will continue normal operations in Australia and New Zealand and does not expect changes to its business after General Motors announced it has taken court action in the US to launch a competitive New GM.
“Operations at Holden are unchanged in Australia and New Zealand and we expect it to remain that way,” Holden Chairman and Managing Director, Mark Reuss, said today.
“GM has clearly stated that all of its businesses in the Asia Pacific region – and that includes Holden – continue normal operations and are not directly impacted by this process in the US.
“No operations outside the US are included in the court filing or court supervised process.
“Holden is a subsidiary of GM but we are a corporate entity in our own right – an independent company under Australian law.
“Beyond that, GM has indicated that Holden will be an important part of the New GM.
“We intend to maintain our focus on Holden product programs and activities.
“That means technology improvements to our best selling Commodore range, launching the all-new Holden Cruze this month, and the introduction of our locally-built fuel efficient, four cylinder small car next year.
“We continue to run full operations at Elizabeth and Port Melbourne, producing cars for our 300-strong independent dealer network.
“We don’t anticipate this decision will have any direct impact on Holden’s workforce, dealers, or suppliers.
“Holden customer warranties are not affected and we continue to deliver the sales and service experience that our customers expect.
“We wouldn’t normally issue statements to highlight nothing has changed, but we appreciate that customers will naturally ask questions about this sort of announcement from the US.”
Mr Reuss said Holden would remain informed of developments in the US, a process which had been determined to reinvent General Motors.
“The process being used in the US is unlike Australian and New Zealand law. It is a fast, court supervised process that permits the sale of selected assets to a new entity,” Mr Reuss said.
“Unlike court-controlled processes in many other countries, US chapter 11 allows GM to deal with the financial issues that have built up over many years and for New GM to emerge as a healthier business, better able to deal with the challenges of today and tomorrow.
“It does not mean ceasing to trade.”
Pending approvals, the New GM is expected to launch in about 60 to 90 days as a separate and independent company from the current GM, with two distinct advantages: it will be built from only GM’s best brands and operations, and it will be supported by a stronger balance sheet due to a significantly lower debt burden and operating cost structure than before.
GM has previously indicated it is negotiating with prospective buyers for the Saab and Hummer brands. GM is working closely with dealers, including those in Australia and New Zealand, to continue delivering vehicles and maintaining aftersales and servicing requirements.
GM Group Vice President and President of GM Asia Pacific, Nick Reilly, said: “We believe this step – which was taken with the support of the US Government – is the most efficient and effective means for New GM to emerge with substantially less debt and lower operating costs, and with our operations positioned for long-term success.”
Holden customers with queries about this announcement can contact the Holden Customer Assistance Centre on 1800 033 349.
KEY FACTS – Holden
Holden employees more than 6000 people in Australia and New Zealand.
Holden spends $500 million annually on employee wages.
Last financial year Holden spent $420 million on research and development – more than any other private company in Australia.
The Holden Commodore has been Australia’s best-selling car since 1996.
Holden has produced more than 7 million vehicles since 1948.
KEY FACTS – GM
What GM Corporation’s US filing is:
An accelerated, court-supervised sale of GM’s strongest operations and brands to New GM, which is intended to be completed within about 60-90 days.
The most efficient and effective means to achieve the substantially lower debt and operating costs necessary to align the operation for future success.
Unlike court-controlled processes in many other countries, the US process being used by GM will allow it to continue trading and enable New GM to emerge as a leaner company with a stronger balance sheet.
What this US filing of GM Corporation is not:
This is not liquidation or a discontinuation of operations by General Motors.
This is not a proceeding similar to insolvency proceedings in Australia.
This does not mean New GM is going out of business or intends to pull out of Asia Pacific or any other region.
GM Holden Chairman and Managing Director Mark Reuss will address media tomorrow, Tuesday 2 June at 9.00am
Source: GM Holden Media Release
Love how people think Holden is Australian when in fact GM bought out Holden ages ago and now its only Australian by labour.
Yes, High Horser, god forbid the Australian labour is the last thing that remains at GM Holden. No, it isn’t important who gets paid to construct the car, not at all.
Douchebag.
Highhorser, I hope the fleas of a thousand camels infest your armpits and groin!
If they do, treatment is at hand http://www.camelphotos.com/cam.....php?p=1909
The internet is a wonderful thing
Devil & Eh179, why do you diss High Horser for the truth.
“Holden” has been GM Holden since before they made their first Holden car.
Holden as we know it as a car manufacturer has always been owned by GM.
^Yes as a car company, but if you were talking about before 1931. Well your wrong.
Duck,
we all know about the saddlery history, followed by the motor body building history (when incidentally Holden motor bodies built bodies for Ford Australia), but most people want to conveniently forget that Holden had become GENERAL MOTORS Holden (and US owned) before any Holden cars were ever built.
“Holden” as a car brand has ALWAYS BEEN US OWNED.
i will never buy another gm product from now on only ford.