General Motors (GM) has filed for bankruptcy protection in the US, the BBC reports, labelling it the ‘biggest failure of an industrial company in US history’.
The move into Chapter 11 bankruptcy protection has been backed by the US government, which is now expected to take a 60 per cent stake in the company.
The White House is expected to announce announce an extra $30bn (£18.5bn) of aid for GM.
US Chapter 11 bankruptcy protection gives an American company time to restructure its finances while being protected from its creditors.
The restructuring is expected to cost the jobs of around 20,000 US workers The firm currently has 173,000 employees across the US, Canada and Mexico.
GM’s European arm is likely to be spared bankruptcy following a proposed deal by Canadian car parts maker Magna International to buy GM Europe’s Vauxhall and Opel brands announced on Friday.
The German government agreed a deal with car parts maker following extensive talks and is now expected to provide an immediate loan facility of 1.5bn euros ($2.1bn, £1.3bn) although job losses are still expected.
Meanwhile in the US, the government is optimistic that GM could exit bankruptcy protection within three months.
Car industry analyst Gary Chaison, a professor of labour relations at Clark University, told the BBC that news would have ‘a huge impact in the US’ because ‘it’s more than just a corporation – it’s an icon.’
Adding: “It represented manufacturing supremacy and good jobs for American workers – that’s gone.”
