General Collapse

US and world car giant General Motors finally files a chapter 11. They already owe a lot of money to the government. They have already lost a good few amount of workers, but this will only increase now.

A chapter 11 bankruptcy is where companies take the option of temporary protection from takeovers (hostile or otherwise) and dissolution. the general idea is that the Bankruptcy filing gives them protection until they can clean up their act and come back into business in their own right. So GM now has a few months to ‘rightsize’ itself and get back into fighting shape if it still wants to be GM into the future.

Only about 10% of companies who file for Chapter 11 have known to come through at the other end of it. Most others get gobbled up in bits and pieces by other players. In GMs case, their global spread makes them more vulnerable to being eventually scattered among a large group of buyers.

For a full analysis of the bankruptcy and its contributing history, see this Economist report.

Rumours are that a Chinese firm is set to buy the Hummer brand

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