What events preceded GM’s bankruptcy?

Explanation

The company underwent several restructuring. After experiencing low sales and profits in the auto business in 2006 and 2007, it sold a 51% stake in its financial services company and focused on its auto business, sold its stakes in other auto manufacturers, closed factories, and reduced workforce to preserve cash. In 2007 it created a trust fund managed by United Auto Workers (UAW) that gave workers a lower wage structure in exchange for funding retiree's health care coverage. In late 2008, the company asked for government assistance. The government then included the auto industry in its Troubled Asset Relief Program (TARP) and received a $13.4 billion loan and asked the company to submit reorganization plans by February 2009. The administration reviewed and rejected the plans and asked the CEO to resign, which he did. The government provided additional loans to the company and its creditors. The loan was given to its creditors to keep selling their products to auto companies on credit. The administration also created a program that ensured that customer warranty claims were honored. The company could not provide a reorganization plan that is acceptable to its debtholders, employees, suppliers, and dealers. It filed for bankruptcy protection as per Chapter 11 of the Bankruptcy Act in June 2009.

Sample Response

The company underwent several restructuring. In 2006 and 2007, it sold a 51% stake in its financial services company and focused on its auto business, sold its stakes in other auto manufacturers, closed factories, and reduced workforce to preserve cash. In 2007 it created a trust fund that gave workers a lower wage structure in exchange for funding retiree's health care coverage. In 2008 the government gave a $13.4 billion loan and asked the company to submit reorganization plans by February 2009. The administration reviewed and rejected the plans and asked the CEO to resign, which he did. The government provided additional loans to the company and its creditors. When the company could not provide a reorganization plan acceptable to its debtholders, employees, suppliers, and dealers, it filed for bankruptcy protection