Detroit-based General Motors Corp. (GM), the world's largest automaker after Japan's Toyota, will file for bankruptcy today, and emerge with majority ownership by taxpayers and liabilities reduced by more than 50 percent.
According to a statement released by the US Government, the "new GM" will get $30.1 billion in bankruptcy financing from the federal government, and the US Treasury does not anticipate providing any additional assistance after that.
The federal government will have a 60 percent equity stake in the automaker, and 12 percent will be held by the Canadian government which is lending $9.5 billion to the company.
GM intends to close 11 factories and idle an additional three, while attempting to reopen one idled facility to build a new small car; however, it has not yet issued an estimation of how many jobs will be eliminated. It also aims to reduce its US hourly workforce to about 40,000 next year from 61,000 at the end of last year.
"The government is a reluctant equity owner that will protect the taxpayers' investment by managing its ownership stake in a hands-off commercial manner," the Obama administration said.
"The resulting agreement is tough but fair," the statement added.
GM, which has already received $19.8 billion in US Treasury loans, will be the largest manufacturer to file for bankruptcy, surpassing Chrysler LLC.
The Obama administration also said in its statement, "The new GM will emerge armed with vehicles from its Cadillac, Chevrolet, Buick and GMC units. It will be built to survive in a market of 10 million annual US car sales, down from 16 million."
Japan's Toyota Motor Corp. surpassed GM last year as the world's largest automaker.