Gm Bankruptcy

Then, on June 1, 2009, General Motors filed for Chapter 11 bankruptcy after failing to successfully negotiate deals with bond holders (Start Fresh Today 2012).

In late 2008, General Motors was in financial distress due to some major financial liabilities. These included

In the hyper competitive world of today’s mega corporations controlled by the sway of the stock market, giant old industrial era companies rule over the automobile market in the United States as well as large parts of the global automobile market. Companies such as General Motors, Chrysler, and Ford were at the center of it until the economic crisis now known as the Great Recession of the late 2000s. The whole market was declining in sales with General Motors and Chrysler taking the biggest hits while Ford only suffered decline comparable to foreign automakers’, Honda and Toyota, levels due to restructuring in prior years. However, the tipping point was edging closer to bankruptcy with General Motors and Chrysler that ultimately

Think of it this way, all of the debt, problems, and poor choices made by the notoriously distinguished old GM were put on a boat (Motors Liquidation, Inc.) and given a viking burial (code 363 liquidated (sold in parts for as much profit as possible)) while every asset went to a new company convolutedly called General Motors. Basically, New GM made out like a bandit.

General Motors is faced with a dilemma. In the face of economic depression, competition from foreign players was driving down profits and the market’s preference was changing to efficient cars due to

The General Motors Corporation is a multifaceted company but its primary function is the manufacturing of automobiles and light trucks (SIC 3711). The General Motors stock is listed on the New York Stock Exchange and has approximately 1,426,592,046 outstanding shares on the marketplace, as of 10/14/2001. It is headquartered in Detroit Michigan with offices around the world. General Motors has many other operations besides automobile manufacturing including: General Motors Acceptance Corporation Financial Services, Hughes Electronics Corporation, and the GM Locomotive Group. (Disclosure.com)

General Motors, the “mother company” has faced many troubles in the past, and surfaced. A research by the National Research Council in the United States has revealed in 1992 that there had many impacts and future impacts in the automotive industry, indeed; it would affect the jobs and the internal economy. However, General Motors understood the threat potential that this and established strategic plans to revert the trend. Furthermore, whether General Motor Company was able to change the trend, and it saw the internal and external factors, prepared a strategic plan, Holden being the first brand in Australia, with at least just the 10 % of the population compared with the USA, the way to get a plan looks easier. In addition, it is easier to see a trend in countries with low population and good policymakers. In 2008 General Motors faced again the limit to bankruptcy. A fierce plan to develop and a new business association with FIAT made that GM avoid the dissolution. Even do all Europe have had a similar crisis( Boudette & Choudhury,

We know declaring bankruptcy is not a decision you made lightly. These are tough economic times and we know that there are so many things that can get out of hand and out of control.

Chapter 7 bankruptcy: the bankruptcy in chapter seven is known as a liquidation process. This process is used when a corporation basically has no other alternatives in saving the corporation and has the ability to attain the essential creditor settlement. All of the corporation’s possessions have to be vended for their palpable value. There has been over a numerous amount of corporations who have declared bankruptcy on a yearly basis. Chapter 9 bankruptcy: this bankruptcy applies to all the cities in all areas. The biggest city to ever announce bankruptcy is Detroit, Michigan. However, there have been others such as: Stockton, California, and lastly, Birmingham, Alabama. Chapter 11 bankruptcy: this bankruptcy means that corporations are able

General Motors, at one point the largest car manufacturer in the world, needed a bailout in 2009 to stay in business. One of the main reason the auto giant filed for bankruptcy was seen on the balance sheet where assets were $82.2 billion and a vast amount of liabilities that equated to a whopping $172 billion. With this massive amount of debt hanging over the company, General Motors according to the Economist, “the chief financial officer sought to raise $3 billion through a sale of bonds or shares,”(Economist Editor). After Lehman Brothers had fallen GM knew that they would not be able to get the funds, so they tried to sell non-core assets,(Economist Editor). At this point, the stock price for General Motors fell to $3, (Economist Editor).

In 2008, the auto industry lost millions of dollars daily due to a deficit in auto loan financing. Years of collective bargaining with unions and a lack of fuel efficiency incentives caused the heartbeat of the big three auto industry to nearly flatline. These problems left them with only two alternatives, face bankruptcy or accept a resuscitation life line.

The 2008 financial crisis was a difficult time for all participants of the automobile industry. Jackson Automotive System’s reluctance to carry debt coupled with a strong working capital position and a conservative financial policy helped bring the company through the financial crisis. After the

General Motors is one of the world's most dominant automakers from 1931. After 1980s economic recession the main goal for automobile companies was cost reduction. Customers became more price-sensitive. Also Japanese competitors came into market with the new effective system of production. So market was highly competitive and directed toward price reduction. The case states that in 1991 GM suffered $ 4.5 billion losses and most part of the costs of manufacturing was due to purchased components. GM NA hired Lopez in order to find the way from "extraordinary" situation and reduce costs.

Both companies made big changes terminating contracts with hundreds of their dealership and General Motors stopped with the making of several of there brands as part of the bankruptcy proceedings and eliminating many jobs as part of there re structuring, many members of congress expressed there concerns with this. Ford was the only one of the three to survive with out entering bankruptcy partly due to credit obtained in 2007. As of 2012, the U.S. car industry has made somewhat of a recovering posting profits once again. General Motors had sales of more that 9 million vehicles, more than Toyota and as of 2014 numbers are higher then they were in 2007

On 19th December 2009, Chrysler closed all the manufacture operation to reduce its cost as well as to make its stock meet the market demand. At the same time, Chrysler laid off 32 thousand employees to reduce its expenditure.