General Motors Bankruptcy: A Case Study

A reduction in the quantity of goods, a decline in the business cycle, and a collective slowdown in economic activity are all characteristics known as a recession. In the most recent recession that took place December, 2007 and ended June, 2009 many companies struggled to stay afloat and some just merely sank in this economic downturn. For example big corporations such as Bear Stearns, Lehman Brothers, Merrill Lynch, AIG, and Citibank were victims of the recession (U.S. Bureau of Labor Statistics, 2012). General Motors a big corporation that was also affected tremendously by the recession and on June 1, 2009 filed for bankruptcy, with $82 billion in assets and $173 billion in liabilities (Bigman, 2013). This was known to be the largest industrial …show more content…
According to Stevens, (2014) GM’s CEO, Wagoner, knew that with the failures of major lending and banking agencies and the bailouts being offered by the government, may be his only chance to save the company (Stevens, 2014). After a tedious and lengthy process, congress agreed to bailout GM. However, even with the bailout as an option, Wagoner and executive colleagues struggled to meet certain requirements of the bailout terms. It was evident as GM, a struggling corporation would require restructuring as one of the requirements before receiving the bailout government aid. Thus, Wagoner was obligated to resign as the CEO of GM and then they would be bought out by the “New General Motors Company”, giving the government control of the new automaker company. According to Stevens, (2014) “with the government’s involvement in bailing out GM and other banks, came harsh criticism from those who warned against socialism, protecting capitalism, and the free market values” (Stevens, 2014). There was much deliberation between the government and GM to successfully recover this huge corporation, as it was vital to the success and economic growth of the United