GM filed for Chapter 11 bankruptcy protection yesterday as part of the Obama administration’s plan to streamline the automobile manufacturer and give a majority ownership stake to the federal government. GM’s bankruptcy filing is the fourth-largest in US history and the largest for an industrial company. The company has declared it has $172.81 billion in debt and $82.29 billion in assets. “The General Motors board of directors authorised the filing of a Chapter 11 case with regret that this path proved necessary despite the best efforts of so many,” GM Chairman Kent Kresa said in a written statement.
The suspension of payments of one of the giants of the American automotive industry has resulted in one of the more significant operations, in both financial and symbolic terms, since Barack Obama took office, with the Government putting no less than $50 billion on the table to obtain a majority stake in GM. President Obama said that despite taking a 60% share in the company, the restructured firm would not be run from Washington. “Our goal is to get GM back on its feet, take a hands-off approach, and get out quickly,” he said.
Fritz Henderson, chief executive and president of GM, said it was a “defining moment” in the history of the century-old car maker, adding “today is not the end of General Motors, but the start of a new and better chapter”.
Indeed, aside from all the complex negotiations surrounding GM’s bankruptcy, which may not necessarily result in the immediate recovery of GM, the company still has great expectations in the electric car it plans to launch in 2010: the Chevrolet Volt. GM has proposed to the American Government an investment of €448 million, which would marry with Obama’s idea of replacing the US’s vehicle fleet with vehicles powered by renewable energies.
The Volt will be able to run 40 miles on lithium-ion batteries and get a range of 400 miles from an internal combustion engine that charges the battery. The four-door sedan with a hatchback is set for release at the end of 2010. GM says the Volt will get the equivalent of 50 miles per gallon on longer trips where an expected four-cylinder engine will be engaged.
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