President Barack Obama said Monday the bankruptcy of GM was a “painful” yet necessary step to ensure the company’s survival.
Obama said the federal government plans to invest another $30 billion in GM, which filed for Chapter 11 U.S. earlier today meaning that the government would own 60 percent of company once it emerges from bankruptcy after an expected 100 days.
Despite the governments’ high shareholding percentage, Obama said he has “no interest” in running GM and added “The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions.”
According to Obama, bankruptcy was a better alternative than making more loans to a company that has been “buried under a mountain of debt” for years.
“In short, our goal is to get GM back on its feet, take a hands-off approach, and get out quickly,” he said.
The one-time world’s largest car maker sought protection today from creditors in bankruptcy court in New York, reporting $82.3 billion in assets and $172.8 billion in debt. The action follows the April 30 bankruptcy filing by Chrysler and comes as the administration reshapes the troubled U.S. auto industry.