General Motors Files for Bankruptcy

01 June 2009

The U.S. automaker General Motors filed for bankruptcy Monday as part of a government-led plan to restructure the struggling 100 year-old company.

The company filed for court protection from creditors after spending months trying to restructure its business plan to become more profitable.

Despite receiving billions of dollars in government aid, GM has failed to recover from a drastic drop in car sales.

The U.S. government is expected to provide an additional $30 billion to help restructure GM through the largest industrial bankruptcy in U.S. history. The governments of Canada and the Canadian province of Ontario have also pledged $9.5 billion to GM.

Senior Obama administration officials say the automaker could be reorganized within 60 to 90 days.

They say the U.S. government will be the majority owner of the new company, but it does not want to be involved in day-to-day operations.

GM officials and President Barack Obama have scheduled separate news conferences Monday to discuss the company's future and the government effort to keep GM in business.

In related news, a U.S. bankruptcy judge late Sunday approved the sale of substantially all of U.S. automaker Chrysler's assets to a group led by Italy's Fiat. The move clears the way for Chrysler to exit bankruptcy protection soon.

Chrysler also has received billions of dollars in government support to help it survive.

Automobiles are a key part of the manufacturing sector, which makes up nearly one-fifth of the U.S. economy.