Legal Commentary

GM to File Bankruptcy Monday Morning

By Jeralyn

General Motors is expected to file for bankruptcy protection tomorrow morning.

Under the restructuring, U.S. taxpayers will own 70% of the new company.

GM is racing to meet the government's Monday deadline to qualify for more aid. It already has received about $20 billion in government loans and could get $30 billion more to make it through what is expected to be a 60- to 90-day reorganization in bankruptcy court.

How it is expected to work: [More...]

it appears the company will sell some or all of its assets to a new entity that would become the new GM, rather than submit a plan to reorganize the old company.

Under a so-called Section 363 sale, the prospective buyer and seller present a fully negotiated asset purchase agreement for approval by the court.

GM's stock sank to $.75 a share on Friday.

In a Chapter 11 bankruptcy reorganization, the shares would become virtually worthless.

There will be job cuts:

It is expected that GM will detail some 20,000 job cuts and the closure of about a dozen plants by the end of 2010. The company has already said it will slash 40% of its network of 6,000 retail dealerships by next year and drop four of its brands -- Hummer, Saab, Saturn and Pontiac.

Full post as published by TalkLeft on May 31, 2009 (boomark / email).