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GM bankruptcy kicks off fast track restructuring

(Xinhua)
Updated: 2009-06-02 14:30

DETROIT - General Motors Corp. drove in the fast lane to revival on the same day of its iconic bankruptcy filing on Monday, signaling the Obama administration's determination and confidence in bringing back the industrial giant.

Confidence boost

"I am absolutely confident that if well managed, a new GM will emerge that can ... out compete automakers around the world and that can once again be an integral part of America's economic future," US President Barack Obama said in a brief statement televised live at Monday noon.

Special coverage: Global Auto Industry Woes Related readings:  GM aims for restart as Chrysler gets green light  Auto icon GM files for bankruptcy  GM CEO: China will continue to be key partner  GM bankruptcy not likely to hurt its China operations Will you buy GM vehicles?

About four hours before Obama's speech, the Detroit-based automaker filed a Chapter 11 petition to the US Bankruptcy Court for the Southern District of New York.

According to a company statement, the US Treasury, the governments of Canada and Canadian Province of Ontario will support GM through bankruptcy. They will hold a combined 72 percent in the reorganized GM.

"Worldwide, GM dealers are open for business, offering competitive financing options on our award-winning vehicles, continuing to honor our industry-leading warranty coverage, and providing outstanding service," said GM President and CEO Fritz Henderson.

A new GM is expected to be launched in about 60 to 90 days as a separate and independent company from the current GM.

The new company "will be built from only GM's best brands and operations, and it will be supported by a stronger balance sheet," Henderson said.

"Furthermore, the US Treasury and the Canadian governments have issued a strong vote of confidence by backing GM's vehicle warranties," he said.

Structure reshape

Hoping to quickly emerge from bankruptcy protection as a new, leaner company, GM will close 14 US factories and three warehouses to slash its operating costs, affecting 18,000 to 20,000 workers in nine states. It aims at bringing the total number of plants in the United States from the current 47 down to 33 by 2012.

The current GM management team will continue to lead the new GM. GM employees worldwide will become part of the new GM.

GM promises to pay dealers' open accounts and continue warranty and incentive programs. Essential suppliers and employees will be paid in the normal course.

Overseas operations

GM confirmed that its operations outside the United States had not been included in the court filing and thus would continue without interruption.

An overnight statement from GM China to Xinhua said the impact of its US parent's bankruptcy "will be minimal to our China business including our operations and sales."

At a press conference, Henderson stressed China as the "critical" part both to the current and new GM.

GM has a vehicle manufacturing venture with Shanghai Automotive Industry Corp. of China. GM vehicle sales in China, its largest overseas market, surged 50 percent to a monthly record of 151,084 units in April, in contrast with a sharp decline in the United States.

Last month, GM has confirmed the production of low-emission Ecotec engines at its joint venture in China, which will be mounted on the newly launched Chevelet Cruze compact sedan. And it plans to sell about 17,300 China-made compact cars in the United States in 2011 and to triple that to about 51,500 in 2014, according to a planning document that GM circulated among US lawmakers.

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