Chances are that, by now, you’ve already heard that the city of Detroit — a city that General Motors’ Renaissance Center global headquarters call home — has filed for Chapter 9 bankruptcy last week. The city is the largest in America ever to pursue municipal bankruptcy, with the filing following months of dire expenditure cuts, state intervention, and discussions with creditors. For its part, The General’s perspective on the matter isn’t as gloomy as one might think, with the automaker saying that the bankruptcy could serve as a “clean start” for the city.
GM has assessed the potential implications of Detroit’s bankruptcy and we do not anticipate any impact to our daily operations or business outlook. Our first thoughts, however, are with our neighbors throughout the city. GM is proud to call Detroit home and today’s bankruptcy declaration is a day that we and others hoped would not come. We believe, however, that today also can mark a clean start for the city. We hope that all parties recognize the sacrifices to follow can help rebuild a stronger Detroit with a level of services and quality of life its citizens deserve. A healthy auto industry will play a part in Detroit’s comeback story and GM is doing its part.
It’s likely that GM’s upbeat prognosis has something to do with to the automaker’s own understanding of bankruptcy proceedings, from which it emerged four years ago. At the time of GM’s filing in 2009, many believed that the proceedings would mark the end for the automaker. Instead, The General emerged a significantly healthier and stronger company.
Since doing so, the automaker has pulled off one of the largest initial public offerings (IPOs) in history worth $23,.1 billion, while investing over $12 billion in its North American facilities, $9 billion of which were reserved for the U.S. The firm also rejoined the S&P 500 and 100 indexes, while achieving 13 consecutive profitable quarters, among other successes.
Leading up to Detroit’s bankruptcy, Michigan Governor Rick Snyder appointed Kevyn Orr as emergency manager in March. Mr. Orr’s job surrounded addressing the city’s growing debt, then estimated at roughly $14 billion, and currently approaching $19 billion. Detroit’s bankruptcy filing, which was signed by Orr and an attorney from law firm Jones Day, lists city-owned properties along with a letter of approval from Snyder, who mentions a “failure to obligations to citizens” as a reason for the bankruptcy.
General Motors itself filed and emerged from Chapter 11 bankruptcy in 2009, marking at that time the fourth-largest U.S. bankruptcy on record.