General Motor Story 101 Years of Glory

The filing is the biggest by a US manufacturer and the third largest in US corporate history. It marks the end of GM’s 101 years as an independent company.

GM had $83bn (£51bn) in assets against liabilities of $173bn, according the filing in the Southern District of New York.

During the Chapter 11 process, GM’s assets are to be divided in two, and using what is known as a section 363 sale, core assets will be placed into a new company that will continue trading once the process is over.

Partial details of the bankruptcy were released on Sunday night by the White House, following final negotiations between it and the company’s board.

The US government is to provide GM a further $30.1bn (£18.5bn) on top of the $19.8bn already lent to the company, and “does not anticipate providing any additional assistance” after that.

In return, the US will receive a 60pc equity stake in the GM that emerges from bankruptcy, while the governments of Canada and Ontario, which are lending $9.5bn to GM, will take a 12pc stake.

The extra money is intended to allow the car manufacturer to continue to operate through the Chapter 11 process, as well as to carry the cost of the restructuring it intends to do.

President Barack Obama is due to detail his thoughts on the process – including the hope that GM can come out of Chapter 11 stronger than it went in – at 11.55am local time (4.55pm in London).

He is also dispatching a number of senior cabinet members to the states most affected by GM’s bankruptcy filing, including Michigan, over the course of the next few weeks.

Following President Obama’s public statement, GM chief executive Fritz Henderson will hold a press conference at the New York offices of Weil Gotshal & Manges, the Wall Street law firm which continues to handle Lehman Brothers’ liquidation process.

Mr Henderson will stay on in his role at the top of the GM, however he will be joined by Al Koch, of advisory company Alix Partners, as chief restructuring officer.

In addition, new permanent board members will be added to the GM board, and a selection process is already thought to be under way.

Around 60 of Mr Koch’s colleagues from Alix Partners will work with GM as it attempts to speed through the Chapter 11 process.

Although Chapter 11 restructurings can often take years, a senior Obama administration official said on Sunday night that it is the government’s hope GM can complete the process within 60-90 days.

Mr Henderson will detail the logistics of the restructuring, including the fact that 11 factories in the US and Canada will be closed and a further three will be mothballed, although one that has already been mothballed will be reopened to build small and compact cars.

The bankruptcy process and the restructuring that follows will also see some 21,000 North American manual workers lose their jobs and see around a third of its 6,000 strong US dealerships lose their franchise.

The GM that eventually emerges from bankruptcy will be built to survive on a US car market that sells 10m cars a year – down from its present break-even rate of 16m vehicles a year.

In addition to the equity stakes held by the US and Canadian governments, the United Auto Workers union will hold a 17.5pc stake in the new company, while bondholders will hold 10pc, and be given the option to purchase as much as a further 15pc from the US Treasury.

Shareholders in the old GM – whose shares closed at a 76-year-low on Friday – will not receive a stake in the new company, which will eventually relist on the New York Stock Exchange/