General Motors filed for Chapter 11 reorganization in the Manhattan New York federal bankruptcy court on June 1, 2009, one month after Chrysler filed for bankruptcy. It is the fourth largest bankruptcy case in the U.S. history following Lehman Brothers Holdings Inc., Washington Mutual and WorldCom Inc.
Founded in 1908, GM dominated the car industry through the early 1950s. General Motors was financially vulnerable even before the automotive industry crisis of 2008-2009. It was running at a loss in 2005. In 2006, GM tried to get out of the financial crisis by obtaining U.S. government financing to support its pension liabilities which failed. Forming commercial alliances with Nissan and Renault also failed. Later the company sought government loans to stay afloat. Finally, it was forced to file bankruptcy in 2009 with the government providing debtor in possession financing during their time in bankruptcy. In its bankruptcy filing for its U.S. and Canadian operations only, GM listed $82.3 billion in assets and $172.8 billion in liabilities. In less than 45 days GM emerged from government sponsored sales in bankruptcy court, a feat that many thought impossible.
NGMCO Inc. purchased the desirable assets of old GM and formed the new GM via the bankruptcy process and was renamed General Motors Company. The purchase was supported by $50 billion in U.S. Treasury loans, giving the U.S. government a 60.8% stake. The new GM revolves around four brands, Chevrolet, Cadillac, GMC and Buick, as well as a few of its overseas operations. The old GM is known as Motors Liquidation Company and includes various properties, including facilities slated to be closed. Such properties will be sold to the highest bidder under court supervision.
GM’s bankruptcy was one that had a major impact on a large cross section of Americans. Rarely has a firm fallen as far and as fast as General Motors.