WASHINGTON (WKOW) -- General Motors will file for bankruptcy protection on Monday.
The deal will give taxpayers a 60-percent ownership stake and expand the government's reach into big business.
President Barack Obama plans to announce his support for GM's restructuring strategy at a midday appearance at the White House, much as he did in April when Chrysler sought court protection. GM will follow with a press conference in New York.
Administration officials say the federal government will pump $30 billion dollars into GM as it makes its way through bankruptcy court. That's on top of the $20 billion in taxpayers' money that the Treasury has already lent to the automaker.
The officials, speaking on condition of anonymity in advance of Obama's public remarks, said the administration expects the court process to last 60 to 90 days. If successful, GM will emerge as a leaner company with a smaller work force, fewer plants and a trimmed dealership.
The following is a release from The White House about GM's restructuring plan:
FACT SHEET: Obama Administration Restructuring Initiative for General Motors
On March 30, 2009, President Obama laid out a framework for General Motors to achieve viability that required the Company to rework its business plan, accelerate its operational restructuring and make far greater reductions in its outstanding liabilities. After two months of significant management engagement, General Motors has developed such a plan and has already begun to make progress toward its achievement. The Company has also secured commitments of meaningful sacrifice from all of its major stakeholder groups, sacrifices sufficient for this plan to proceed forward. As a result, the President has deemed GM's plan viable and will be making available about $30bn of additional federal assistance to support GM's restructuring plan. To effectuate their plan, General Motors will use Section 363 of the bankruptcy code to clear away the remaining impediments to its successful re-launch.
For the better part of a century, The General Motors Corporation has been one of the most recognizable and largest businesses in the world. Today will rank as another historic day for the company-the end of an old General Motors, and the beginning of a new one.
General Motors Restructuring - Shared Sacrifice
The President made clear throughout this process that every one of the Company's stakeholder would be expected to sacrifice, and that none would receive special treatment because of the involvement of the government. The resulting agreement is tough but fair, and has garnered broad support from GM's major stakeholders:
Details on the Creation of New GM:
The newly organized GM will purchase substantially all of the assets of the old GM needed to implement its business plan out of a chapter 11 in exchange for the U.S. Government relinquishing the majority of its loans to GM.
Principles for Managing Ownership Stake
Consistent with the goal of clearly limiting the government's role as a reluctant equity owner but careful steward of taxpayer resources, the Obama Administration has established four core principles that will guide the government's management of ownership interests in private firms. These principles will apply to the U.S. government's equity stake in GM:
The Bankruptcy Process
During this process, GM will continue operating in the ordinary course. From an operating perspective, the day after the filing will not be materially different from the day before the filing. The following parties will be treated as described below: