It’s official: General Motors is bankrupt
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.
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