GM President and COO Fritz Henderson will be replacing Rick Wagoner as CEO who will be stepping down at the Obama administrations request, in order to give GM a new fresh start.
The Auto Task Force decided that they do not believe GM nor Chrysler have met the restructuring goals that were required as of March 31st. GM will be given one more chance. They will receive enough aid to permit them to operate for another 60 days. At that point if sufficient, aggressive restructuring of debt has not occurred, bankruptcy will be enforced. The government is confident though GM with proper restructuring can be a viable successful company. And per President Obama “I’m confident GM can rise again.”
Chrysler not so much. It will be supported for 30 days, but the government has concluded Chrysler is not viable as a standalone company. If they have not completed a proposed merger with Fiat by then, they too will head into bankruptcy. If successful with their merger though, $6 billion in more aid would be given. (Late word has it the merger deal has been achieved.)
The Task Force also found that GMs current plan was not viable even if the economy improved.
Though not the administrations first choice a quick, surgical 30 day bankruptcy appears to be both companies best option for survival. The government could act as debtor-in-possession during the court proceedings.
Obama said bankruptcy would not mean liquidation for GM nor would it mean it would be stuck in courts for years, but rather would mean “using legal structure as a tool,” he said, to allow the rapid formation of a lean mean GM.
The government has also offered full support of any vehicle warranties through this time. As well an auto czar name Edward Montgomery, previous deputy Secretary of Labor, has been appointed help bring all parties to the table and produce effective restructuring.
In the end, the Volt will survive this process though your GM shares may not. GM sources have specifically told GM-Volt.com “the Volt is among the crown jewels of our recovery and is not in jeopardy.”
GM’s new CEO Fritz Henderson issued the following response:
“The U.S. Treasury has said that it strongly believes that a substantial restructuring will lead to a viable GM. Over the next 60 days, we will work around the clock, with all parties, to meet the aggressive requirements that have been set by the Task Force, and to make the fundamental and lasting changes necessary to reinvent GM for the long-term.”
“We have significant challenges ahead of us, and a very tight timeline. I am confident that the GM team will succeed, and that a stronger, healthier GM will play an important role in revitalizing America’s economy and re-establishing its technology leadership and energy independence.”
“The administration has made it clear that it expects GM to expand and accelerate its restructuring efforts. I want the American people to know that we understand and accept this guidance. The road is tough, but the ultimate goal – a leaner, stronger, viable GM – is one we share.”
Full Document of Government Conclusions: (New York Times)
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