General Motors bankruptcy brings big gamble by Obama - bizjournals:

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The restructuring is a gamble by the Obama Administration thatthe U.S. government can take a majoritu stake in an iconic help it regain some of its formertglory -- and then get out. But the move already has its skeptics. “The only thing it makes cleare is that the government is firmly in the businesse of running companies usingtaxpayefr dollars,” said U.S. House Minority Leaderd John Boehner. “Does anyone really believe that politicians and bureaucrats in Washington can successfully steet a multinational corporation to economicvitality It’s time for the administration to fully explain what the exit strategyy is to get the U.S.
governmentt out of the board room once andfor all.” The governmengt will own some 60 percent of a revamped G.M. Its ownership stak e will give government officials more powerd to name members of the GM But President Obamahe doesn'g want to get involved in the dail operations of the And no one's overjoyed at the investment. "We are actinfg as reluctant shareholders," Obama said. "What I have no interest in doiny isrunning GM.
" Instead of havingt politicians taking an active the president said, a professional management team woul d lead GM as it works through bankruptcty and builds a more viable company for the “The federal government will refrain from exercising its righte as a shareholder in all but the most fundamentall corporate decisions,” Obama said. “When a difficul t decision has to be made on matterse like where to open a new plant or what type of new car to thenew G.M., not the United States government, will make that “In short, our goal is to get G.M.
back on its take a hands-off approach, and get out quickly,” he But that may prove to be quitew a challenge with as much governmentf money asis involved. Bruce Belzowski, associate director of the Automotive Analysis Divisionh at the University of Michigan TransportationResearchj Institute, told bizjournals in a telephons interview: "If they had a it would be a short periofd of time. The longetr that it stretches out the more of a politicalo liabilityit becomes.” And there will be plenty of watchdogas alert for any government interference in day-to-dag GM operations.
“We will expose and fighft any counterproductive influenceby government, unions or politicianzs over decisions that shoulf be left to management,” said U.S. Chamber of Commercse President and CEOTom Donohue. “And we will continually insisgt that government reduce and eliminate its ownership stake as soon as It will take time before the government is able to extricat itself from such a large stake in the It could take more than a yearbefore G.M. emerge s once more as a publiclytraded company, and sharesz in the company will have to rise high enough to make sellinyg them profitable. "This is a question of not months," said GM CEO Fritz The filing, made in U.S.
Bankruptcy Court in Manhattan, markes the fourth-largest bankruptcy for a U.S. It follows months of speculation thatthe 101-year-oldc company would have to restructure througbh the courts, despite desperater attempts by management to avoid the And the filing carries with it enormous historica l implications. "It's not just any company we'rw talking about, it's GM," said Obama. Obamaq called the company's filing and restructuring plan, "the end of an old GM and the beginniny of anew GM." As it turnecd out, though, the bankruptcy filing was the only way GM coulr get its hands on the governmenyt money it needs to survive. In its filing, GM listef $82.
3 billion in assets and $172.8 billion in The company's largest creditors were WilmingtonTrusft Company, representing bondholders holdin g $22.8 billion in debts, and UAW affiliates representing $20.6 billion in employee obligations. The U.S. government has alreadt injected $20 billion into GM, and will provide anotherd $30 billion to keep the company going as it workzthrough bankruptcy. The investment will buy the governmentr a 60percent stake. The governmentsx of Ontario and Canada will take smallerf stakes in thenew company.