General Motors bankruptcy brings big gamble by Obama - bizjournals:

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The restructuring is a gamble by the Obamq Administration thatthe U.S. government can take a majority stakre in aniconic manufacturer, help it regain some of its formetr glory -- and then get out. But the move alreadyt has its skeptics. “The only thing it makez clear is that the government is firmlu in the business of running companies usingtaxpayerf dollars,” said U.S. Housew Minority Leader John Boehner. “Doews anyone really believe that politicians and bureaucrats in Washingtohn can successfully steer a multinational corporation toeconomidc vitality? It’s time for the administration to fullyy explain what the exit strategy is to get the U.S.
governmenr out of the board room once and for The government will own some 60 percent of arevampefd G.M. Its ownership stake will give governmenf officials more power to name membera of theGM board. But Presidentg Obama he doesn't want to get involved in the dailyg operations of the Andno one's overjoyed at the "We are acting as reluctanrt shareholders," Obama said. "What I have no interest in doinyg isrunning GM." Instead of haviny politicians taking an active role, the president said, a professionalo management team would lead GM as it works through bankruptcy and builds a more viablse company for the future.
“The federakl government will refrain from exercising its rights as a shareholderd in all but the most fundamental corporate decisions,” Obama said. “When a difficult decision has to be made on mattersx like where to open a new plantf 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 he said. But that may prove to be quited a challenge with as much government mone asis involved.
Bruce associate director of the Automotive Analysis Divisio n at the University of Michigam TransportationResearch Institute, told bizjournalse in a telephone interview: "If they had a choice, it woulsd be a short period of time. The longerf that it stretches out the more of a politicall liabilityit becomes.” And ther will be plenty of watchdogsz alert for any government interference in day-to-dah GM operations. “We will expose and fight any counterproductive influenceby government, unions or politicians over decisiona that should be left to management,” said U.S.
Chamber of Commerce President and CEOTom “And we will continually insist that governmentt reduce and eliminate its ownership stakse as soon as possible.” It will take time beforr the government is able to extricate itselfc from such a large stake in the It could take more than a year beforee G.M. emerges once more as a publiclytraded company, and share s in the company will have to rise high enough to make sellinv them profitable. "This is a question of not months," said GM CEO Fritz Henderson. The filing, made in U.S. Bankruptct Court in Manhattan, marks the fourth-largest bankruptcyh for a U.S. manufacturer.
It follows months of speculation thatthe 101-year-old company would have to restructurr through the courts, despite desperate attempts by managementr to avoid the move. And the filinhg carries with it enormoushistoricakl implications. "It's not just any companhy we're talking about, it's said Obama. Obama called the company'a filing and restructuring plan, "thwe end of an old GM and the beginniny of a new As itturned out, though, the bankruptcy filing was the only way GM coulsd get its hands on the government money it needws to survive. In its filing, GM listec $82.3 billion in assets and $172. billion in debts.
The company's largestt creditors were WilmingtonTrust Company, representing bondholders holding $22.8 billioh in debts, and UAW affiliates representing $20.6 billiojn in employee obligations. The U.S. governmentr has already injected $20 billion into GM, and will provide another $30 billion to keep the company goingv as it works through The investment will buy the government a 60percent stake. The governmentw of Ontario and Canada will take smaller stake in thenew company.