The recent recession has caught some more prey. General Motors Corp’s seems to be its new victim. All this time people had a hard time keeping up with their finances and the recent ordeal with General Motors Corp’s has just worsened the situation.
The world’s second largest automaker company is on the verge of bankruptcy with a $6 billion first quarter loss. General Motors has already shut many of its plants, and intends to ask employees for a mutual exit. This certainly implies that there will be thousands of people who will be added to the existing list of unemployed staff.
The suppliers, dealers and employees are unable to find an end to their anxiety as till now. The recent offer from the US government to the owners of the General Motors bond holders for 10% equity stake was rejected upfront, which eventually forced the government to offer 20% stake.
Finally, when all federal help failed, GM motors couldn’t avoid bankruptcy. It has been delisted from the New York Stock exchange as well. The Obama Government intends to invest around $30 billion upon its reorganization. The final ruling about the restructuring financing is awaiting court orders. The new General Motors will only owe $17 billion compared to $54.4 billion it owed prior to filing for bankruptcy.
While the future seems bleak for General Motors and its employees, it seems that the only people benefiting from the whole ordeal at this point are the lawyers. Unlike the past, where most companies resorted to restructuring to manage their finances, none of the companies seems to be benefiting from this option, although the CEO of General Motors has promised a better future for the reorganized company.
The US governments help may do some good for General Motors, however, if any good is to come in the near future, the cost of it will be eventually borne by the honest tax payers.
