IT'S over – General Motors has filed for bankruptcy. The ailing car giant has sought protection from its creditors under Chapter 11, allowing it to continue to trade while it restructures.
Its failure is the third largest in American corporate history, following the collapse of banking firm Lehman Brothers' and telecoms company Worldcom.
US president Barack Obama has already given the greenlight for more than bn of state aid, and in return for another bn (£18.5bn) the US government will take a 60 per cent stake in the new, smaller GM, which will be re-launched in 90 days.
The restructure will see the company split in two. Succesful brands such as Cadillac and Chevrolet, along with profitable factories, will form a 'new GM', while bad assets and poorly performing brands such as Saturn and Hummer, will become 'old GM' and be potentially sold off.
GM's European arm – which includes Vauxhall in the UK and Opel in Germany, although not Saab – will be unaffected by the filing as it has been saved by Canadian car parts company Magna.
Magna has yet to reveal its full plans though, which are set to include job losses and factory closures, leading to concern from unions in the UK. Vauxhall has manufacturing plants in both Luton and at Ellesmere Port which together employ 5,500 people.
UK Business Secretary Peter Mandelson told the BBC that he had received assurances from GM Europe bosses – who selected Magna as their preferred bidder over Fiat – that Vauxhall production would continue in the UK. For more details click here.
Thanks to: Auto Express