General Motors Files for Bankruptcy,
But Hopes to Save the Company

One of the most famous companies in American history needs help to survive. General Motors is seeking government help. General Motors filed for bankruptcy on June 1st.

The filing is the largest industrial bankruptcy in United States history.

GM says it owes $172 billion. The company claims it has $82 billion in assets.

The federal government is going to give $50 billion to keep GM in business. In exchange, the government will own 60 percent of the company.

President Barack Obama said GM is too important to the future of the nation to be allowed to shut down. But he also said the government cannot keep giving money to GM.

Obama said his goal is to get GM back on its feet, take a hands-off approach to how the company operates and get out quickly.

He said the government does not want to be involved for longer than needed to help the company.

The government of Canada also is giving $9.5 billion. The Canadian government will own about 12 percent of GM.

Largest auto maker for 100 years
For more than 100 years, General Motors was the largest auto maker in the nation. Cars made by GM include the Chevrolet, Buick, Cadillac and Pontiac models.

In recent years, GM also made a lot of pickup trucks and Sport Utility Vehicles. Both models are larger than cars.

GM ran into problems in recent years as fewer people bought new cars. Sales of SUVs and pickup trucks also dropped by large amounts. The current recession caused many people to keep their older vehicles longer.

GM is asking the federal bankruptcy court for protection from creditors. GM is seeking to have its debts reduced by the court.

The company hopes the court will cancel about $79 billion of the debt.

Under the request, GM would be allowed to continue operating. But it would have fewer workers and would make fewer cars.

Will stop making Pontiacs and other brands
GM is selling brands such as Saturn and Hummer. It also is going to stop making other brands like Pontiac.

The Big Three automakers of the United States are all headquartered in Detroit, Michigan. Ford and Chrysler are the other two major auto makers.

Ford officials have said their company will not need to file for bankruptcy. Chrysler is the smallest of the three. Chrysler is expected to emerge from bankruptcy this summer.

Cars are also made in the U.S. by foreign auto companies. Toyota and Honda have plants in the U.S.

GM has auto-making plants in many states in the eastern part of the country. GM also has plants in Canada and in 34 other countries.

Many dealerships are closing
GM is closing hundreds of auto dealerships around the country. Dealerships sell vehicles to customers.

GM has 91,000 employees in the U.S. But it will eliminate 21,000 hourly jobs and 8,000 office jobs under the bankruptcy plan.

GM made more cars worldwide than any other company until 2008. Toyota passed GM last year.

A federal bankruptcy judge in New York City will decide whether to approve the GM plan. The decision could come before September.

The new GM would be smaller. It also would have lower costs. Under the plan filed with the court, GM expects to sell about two million vehicles in the U.S. next year. Its share of the market would be about 18 percent.