GM leaves bankruptcy with $48 billion in debt, a dramatic improvement over the $176 billion it claimed in its Chapter 11 filing. The new company will also drive into the future without old liabilities, which will remain in bankruptcy as bad assets to be liquidated or sold off. Although a U.S. bankruptcy judge approved the sale on July 7, the order did not take effect until yesterday.
A group of asbestos claimants and car-accident victims cried foul, formally appealing the ruling. Their request for an expedited appeal that would bypass the U.S. District Court was denied by Judge Gerber and a federal district court denied a motion to extend the initial four-day stay.
The reorganization through Chapter 11 was forced on GM by the Obama administration, which made a $50 billion commitment to bailout the company. After losing more than $80 billion in the last four years, the administration forced out CEO Rick Wagoner and pushed for deep cuts in an effort to make the company more competitive. Some of GM's creditors decried the government intervention, saying the company, after years of bad decisions, should have been allowed to fail.
In addition to the U.S. government's 60.8 percent stake in the company, the Canadian government holds a 10 percent stake and United Auto Workers Union's health care trust fund owns 17.5 percent.
Until 2008, GM ranked as the top auto maker in the world in terms of sales, a distinction it held for 77 years. Toyota Motor Corp. of Japan now leads the world in auto sales.