Playing a key role in GM's reorganization will be Albert Koch, who has been named the company's chief restructuring officer. Koch, a managing director at the turnaround firm AlixPartners, helped steer Kmart through its Chapter 11 restructuring in 2002.
Under GM's restructuring plan, the U.S. government will receive $8.8 billion in debt and preferred stock in the new company and nearly 60 percent equity in return for its $30 billion in funding.
In addition, the government will have the right to appoint initial directors to GM's board except for two members, one to be appointed by the Canadian government and the other selected by the trustees of the United Auto Workers union retiree health care fund.
The governments of Canada and Ontario will provide $9.5 billion to GM and will receive $1.7 billion in debt and preferred stock and 12 percent equity in the company.
The independent trust established for GM retiree health care benefits will receive $2.5 billion paid in three installments ending in 2017 as well as $6.5 billion in 9 percent preferred stock.
The trust -- referred to as the VEBA -- will also receive 17.5 percent equity in the new GM and the right to purchase an additional 2.5 percent stock.
The UAW has agreed to significant changes to its existing labor contract and union retirees will see their health care cut.
Finally, bond holders representing nearly 54 percent of GM's $27 billion unsecured debt have agreed to swap out the debt for 10 percent equity in the new GM as well as the right to purchase an additional 15 percent equity in the new company.
"UAW members have once again stepped up to make necessary and painful sacrifices to preserve U.S. manufacturing jobs," UAW president Ron Gettelfinger said in a statement Friday. "This settlement agreement will give GM a chance to survive the worldwide collapse of industry sales and return as a viable company once the economy recovers and consumers begin purchasing vehicles again."
While the government will now be the majority shareholder in the new GM, senior administration officials stressed that the government will not interfere in the day-to-day operations of the new company.
As a shareholder, however, the administration said it would only vote on core government issues including selecting the board of directors and other major corporate issues in order to protect taxpayer dollars. No government employee will be allowed to serve on the board or work for the company.
"The equity ownership of the U.S. government is not something we sought or desired," a senior administration official said. "It was simply a necessary outcome of the restructuring process out of the desire to have GM with a substantially deleveraged balance sheet and able to be competitive."
"There are a number of principles that are going to govern our behavior as a shareholder in this company and others -- one of which is no involvement in day-to-day business matters and that will be a continuing principle for us," another official added, noting that "we certainly intend to maximize taxpayer proceeds ... but we also intend to exit as soon as possible."