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General Motors Comments On Detroit’s Bankruptcy

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.

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Comments

  1. Bankruptcy is the only real way out for most Cities. Many made obligations that at the time they could afford but now no longer can support. A bail out in this case is not going to work as the only way Cities can change their funding is to eliminate and renegotiate the obligations or raise taxes.

    If they raise taxes the people there can not afford it and MFG will leave or not come in to help fix the situation. This is not like GM where they can invest and make a better product.

    A bail out is a band aid on a fatal gun shot wound. To fix this they will need bankruptcy surgery.

    Also you bail them out here there are 100 more cities in nearly as bad shape, The Fed can not afford to bail them all out.

    Let the governor do what he needs to do here and it will take time but they will at least stem the flow. The key for city officials is to co operate and start taking back the many parts of the city to get people to invest and rebuild. If they do not get more people and companies to relocate there it will never get better.

    Going to Detroit makes you feel Cleveland is not so bad and it is not all that great. That is how dire it is and has been there.

    Reply
  2. Tragic, Merica…

    Reply
  3. Whos gonna bail america out when it goes bankrupt? China?

    Reply
  4. I hope Detroit gets back on its feet. Motown will live on

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  5. Robocop to the rescue?

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  6. People complain about bankruptcy but its part of our legal system and should be used when legally allowed! For the people that cant get passed the fact that this is part of our system stop shouting your complaints towards these companies and focus your anger at the people that we elect to make these rules/laws!

    I see nothing wrong with playing by the rules, if those rules change then so be it! Rules are made to follow and as long as a company/person follows those rules/laws we as the public should not have a problem it!

    As for America, we will take care of ourselves when the time comes! A time will come when America stops taking care of the rest of the world, but that time has not arrived yet!

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