GM Set For Government-Assisted Bankruptcy

General Motors Corp., the iconic U.S. automaker that turned the concept of a "car for every purse and purpose" into a global icon, will file for bankruptcy protection Monday and the federal government plans to take a 60 percent ownership stake in the company, said a congressional official briefed on the plan.

President Obama plans to tell the nation Monday that the government will provide an additional $30 billion in aid to help the automaker emerge from bankruptcy and would stress the government's commitment to staying out of the automaker's business decisions, the official told The Associated Press.

GM President and CEO Fritz Henderson was holding a news conference in New York immediately following Obama's address from the White House.

A second person familiar with the details said the Canadian government would take a 12.5 percent stake in GM and a United Auto Workers trust for health care expenses would get 17.5 percent.

Bondholders would receive a 10 percent stake with the possibility of increasing their share to 25 percent. Both officials requested anonymity because they were not authorized to speak publicly about the plan.

GM, the century-old manufacturer of Chevrolet, Buick and Cadillac cars and trucks and one of the nation's largest employers, is expected to file for Chapter 11 bankruptcy protection at 8 a.m. EDT Monday, according to people familiar with the company's plans. They declined to be identified because the plans haven't been officially announced.

The automaker worked feverishly in recent days to win concessions from stakeholder groups to ensure a speedy bankruptcy.

It would be the largest industrial bankruptcy in U.S. history, and the fourth-largest overall. In addition, a GM bankruptcy would be unprecedented as the federal government would pump billions more into the company after providing $20 billion since the end of the Bush administration.

A majority of the Detroit automaker's unsecured bondholders have accepted a deal viewed as crucial to reorganization, and Germany agreed to loan $2 billion to GM's German unit, Opel, as part of its acquisition by a Canadian auto parts supplier.

GM plans to name turnaround executive Al Koch to serve as its chief restructuring officer to help the company through bankruptcy protection, said a person familiar with the matter. The person, who spoke on condition of anonymity, was not authorized to speak about the appointment publicly.

Koch, a managing director with AlixPartners LLP, is a veteran turnaround specialist who helped Kmart Corp. through its Chapter 11 reorganization. He will lead the separation of the automaker's assets into a "New GM" and the remaining parts of the company that will form "Old GM." Koch will lead the management team that winds down the "Old GM" company once the automaker emerges from bankruptcy.

The automaker was founded in 1908 by William C. Durant, who brought several car companies under roof and developed the strategy of "a car for every purse and purpose" in the 1920s that was designed to appeal to consumers of all ages and financial status.

The maker of Chevrolet, Buick and Cadillac cars and trucks, GM commanded more than half the U.S. car market in the 1950s and employed more than 600,000 workers in the late 1970s, making it the largest private employer in the country.

The company plans to cut 21,000 employees, about 34 percent of its work force, and reduce the number of dealers by 2,600. GM was announcing plans to close 11 facilities, idle three others and name the buyer of its Hummer division. GM's stock dropped to its lowest price in company history Friday, closing at just 75 cents. The shares will be virtually worthless in a Chapter 11 reorganization.

"There is still plenty of pain to go around, but I'm confident this is far better than the alternative," said Sen. Carl Levin, D-Mich. "It's a new beginning, it's a rebirth, it's a new General Motors."