New GM will emerge from bankruptcy today a smaller company with fewer brands and owned by the US government.
GM is gone and a new GM is born.
And the bankrupt Detroit automaker's gimmick has worked. A new company formed from a purchase of the old GM's 'good' assets will emerge from Chapter 11 only 41 days after GM was forced into bankruptcy protection on the 1st of June.
The new company will be majority owned by the US government with a 60.8 percent stake. The Canadian government will also own a 11.7 percent share of the new GM. The US Treasury will have committed some 50 billion dollars to GM by year's end. The remaining share of the now private company will be held by the UAW (17.5 percent) and bondholders who previously held GM debt will get 10 percent of the new GM.
The voyage through Chapter 11 proceedings had to be quick, lest GM brand's suffer terminal damage in the marketplace. But there are still obstacles to overcome. Since the US government now owns GM, Congress can act to exert control, and a majority of House members have voted for a bill that blocks the closing of GM and Chrysler dealerships in order to help save jobs. But GM needs to close the 1,300 dealerships it had planned to in order to trim its operations and become a viable company once again.
Still, the final test will be with consumers. Will they buy GM cars?
The President of GM North America, Troy Clarke, believes it can pass that test. "This is a new General Motors, which is going to be focused on fewer brands, fewer entries...We'll ask for people to please give us that one look. Give us that one consideration and we won't disappoint you."
Sounds desperate. But who isn't these days?