General Motors Bankruptcy

General Motors Bankruptcy

After showing signs of struggle, General Motors, one of the leaders of the automotive industry, inevitably filed for a chapter 11 bankruptcy. Chapter 11 bankruptcies are forms of corporate financial reorganization that allows companies to continue to function while they follow debt repayment plans. Under this chapter, companies are allowed to continue to operate, generate revenue and protect jobs while paying off creditors over time.

Since being founded in 1908 General Motors has been notorious for producing quality American made automobiles and overtime has established itself in over 140 countries. However, in the last several years, a major shift in the economy has pushed General Motors into its own economic downfall. The figure below depicts the decrease in market shares for General Motors from 1980 to 2009.

FIGURE 1

General Motors Decreasing Stock

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Although this had tremendous impact on the company itself GM also affected other parts of the automotive industry, as well as America. With the help of government aid it is now General Motors main focus to pinpoint the company’s prior mistakes that led to their current economic status and prevent them from reoccurring in the future. Meanwhile, thousands of the company’s employees are jobless. Other automotive companies are faced with the task of keeping themselves economically stable, such as competitor Chrysler LLC which filed for bankruptcy a month before General Motors. Now the nation’s capital is relied on to provide continued aid to support General Motors rebuilding. After reviewing what caused the companies bankruptcy and working to help those affected by it, General Motors is currently trying to find solutions to its bankruptcy that is effective with a limited impact on the nation.

Causes of General Motors Bankruptcy

General Motors, a competitive manufacturing company, was on the verge of bankruptcy as early as 2005 (Olson & Images, 2009). The economy...