Well it finally happened. General Motors (GM) filed for Chapter 11 bankruptcy protection today. Bankruptcy appears to have been necessary as the US automaker was saddled with billions in debt and obligations. The bankruptcy courts have given GM 15 billion in emergency financing so that the company can continue to operate. It took the perfect storm to drive GM to bankruptcy but it happened in 2008. GM was undone by years of declining auto sales combined with an oversupply of bonds, underfunded pension obligations and unfavorable contracts along with the worst economic environment since the Great Depression. Chrysler has undertaken similar steps and still faces the possibility of extinction. GM hopes to rebound a leaner stronger more efficient company that investors are willing to invest capital in soon. Only time will tell if GM emerges from bankruptcy as an innovative new auto company or the same old repackaged auto supplier of the past 20 years.
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