General Motors will file for Chapter 11 bankruptcy protection in New York on Monday in a humiliating fall from grace for a symbol of America's industrial might and the world's biggest carmaker for much of the 20th century.
Prior to the filing, which will mark the largest bankruptcy in history of an industrial business, US President Barack Obama and Fritz Henderson, GM's chief executive, will seek to reassure workers, suppliers, dealers and car buyers that a leaner, reinvigorated GM will emerge from a court-supervised restructuring.
GM employs 230,000 people around the world, building more than 20,000 vehicles a day.
GM will say that it aims to emerge from Chapter 11 by August 1, shorn of much of its debt, four of its eight brands, and surplus plants and dealers.
In a process similar to one followed over the past month by Chrysler, GM's smaller Detroit rival, unwanted assets would remain in Chapter 11 to be wound down or sold. A judge is expected to give the go-ahead within the next few days for Chrysler to cement a far-reaching alliance with Italy's Fiat.
Depending on appeals by dissident creditors, the decision would clear the way for the "new" Chrysler to emerge almost immediately from Chapter 11.
GM secured approval over the weekend from holders of a majority of $27bn in unsecured bonds for an offer giving them a 10 per cent equity stake in the restructured GM, with warrants for another 15 per cent later.
However, while GM is hoping for a speedy transit through the court, the judge could rule that GM's bankruptcy plan is illegal if it is deemed to be a reorganisation plan disguised as a sale process.
The US and Canadian governments would initially own 72.5 per cent of the new GM, with the remaining 17.5 per cent held by a United Auto Workers union healthcare fund. Existing shareholders would be wiped out.
The company has taken several other steps to smooth its way through the restructuring. It reached a deal last week to sell control of its European operations to Magna International, the Canadian auto supplier, in partnership with Sberbank, a Russian bank. None of GM's major overseas operations is expected to join the parent in bankruptcy.
Union members in the US and Canada have agreed to benefit cuts and more flexible work rules to make GM more competitive with Toyota and other non-union rivals. GM is also likely to announce within the next day or two the long-awaited sale of Hummer, the large sport-utility vehicle that became an emblem of GM's missteps.
Additional reporting by Tom Braithwaite in Washington and Nicole Bullock in New York.
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