Jun 1, 2009 11:59 pm US/Eastern
Interim CEO: 'GM That Let You Down Is History'
New Yorkers Seems To Have Faith That One-Time American Jewel Can Make Triumphant Comeback
Reporting
Lou Young
NEW YORK (CBS) ―
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General Motors' bankruptcy has shattered consumers' confidence in the once-venerable brand. Many consumers now find themselves thinking twice about buying its cars. (File)
Bill Pugliano/Getty Images
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General Motors president and CEO, announces that GM will seek bankruptcy protection on June 1, 2009, at a press conference in the GM Building in New York.
Stan Honda/AFP/Getty Images
General Motors may be headquartered in Detroit, but it's road to bankruptcy reorganization runs right through Manhattan. GM's company-owned dealership in Harlem filed for bankruptcy just before the parent company on Monday, allowing the automotive giant to use New York's court system, known for it's expertise in handling massive Chapter 11 filings like Enron and WorldCom.
The papers were filed in lower Manhattan and by lunchtime taxpayers were the proud new owners of what was once a jewel of American industry.
The outline of the deal means GM will get an additional $30 billion from the U.S. Treasury, $9.5 billion from the Canadian government and billions in benefit and work rule concessions from the United Auto Workers union.
Interim CEO Fritz Henderson made the announcement by simply telling employees, "The GM many of you knew, the GM that let so many of you down, is history."
The deal wipes out current GM stockholders and sets up a new company 60 percent owned buy the U.S. government. Canada gets a 12.5 percent share for its stake with 17.5 percent going to the union and another 10 percent to bondholders.
The new GM will be smaller, shedding about 21,000 jobs, 14 plants and three distribution warehouses, along with an estimated 1,100 dealerships. The unknown factor in all this is how customers will react.
Benny Ocasio wondered out loud as he examined the sales sticker in the window of a GMC truck.
"We're hoping," he said, "that when it goes bankrupt that they'll still honor their service contracts."
Both the company and President Barack Obama, who might be considered the ultimate boss now, said GM's contracts will be fully serviced. The truth is, though, that with so many dealerships closing customers may have to do more traveling to get the work done.
Others actually seemed encouraged by the news of the reorganization. Alvin Rowe walked through the Harlem Chevrolet, Cadillac, Saturn dealer Monday ready to buy.
"I still believe in GM," Rowe told CBS 2 HD. "They've been good to me through the years."
The company will rebuild around core brands Chevrolet, Cadillac, Buick and GMC. Pontiac has already vanished as an active brand and Saturn could follow. GM plans to sell it's Hummer brand.
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