General Motors files for bankruptcy protection

AP – General Motors CEO Fritz Henderson speaks at a press conference in New York, Monday, June 1, 2009

U.S. car giant General Motors (GM), once the world's largest company, has filed for bankruptcy protection, becoming the biggest industrial bankruptcy in U.S. history.

Speaking to the press in the wake of the bankruptcy announcement on June 1, U.S. President Barack Obama said the move was part of a "viable, achievable plan" that will give GM a chance to "rise again."

The move into bankruptcy protection has been backed by the U.S. administration, which will take a 60 percent stake in the company in exchange for $50 billion in financial aid. Obama said he hoped GM would emerge stronger from bankruptcy proceedings that are expected to take between 60 to 90 days:

"I'm confident that the steps I'm announcing today will mark the end of an old GM and the beginning of a new GM, a new GM that can produce the high-quality, safe, and fuel-efficient cars of tomorrow, that can lead America towards an energy-independent future, and that is once more a symbol of America's success," Obama said.

GM's decline and ultimate demise is seen by many as an illustrative example of failed economic policies and the inability of the U.S. auto industry to adapt to the rapidly changing global conditions requiring fuel-efficient cars.

The company was also crippled by its generous employment-benefits policies, which, unlike those of its Asian competitors, drained significant portions of its revenues.