US car giant General Motors is expected to file for bankruptcy early tomorrow morning AEST, but its local subsidiary GM Holden is expected to be safe for now.
Federal Industry Minister Kim Carr said yesterday that it was important to realise that Chapter 11 bankruptcy in the US is very different to bankruptcy in Australia – in the US, Chapter 11 is designed to give a struggling company protection from creditors and allow it time to restructure.
“I remain very optimistic that Holden will weather the global financial storm and emerge stronger,” Carr said.
“Holden has already undergone significant restructuring. The cooperative efforts of management, workers and the Australian Government have put the company in a good position to deal with whatever General Motors may announce in the coming days.
“I expect that Holden will be safe even if General Motors do go into Chapter XI bankruptcy.”
Under the restructuring plan, GM would be controlled by the US Government, with the Canadian Government expected to emerge with a small share of the business. A union health-care trust will own 17.5%, while 10% will be used to placate creditors.
But any restructure is likely to result in widespread job cuts and assets sales. While GM said in February that Holden was “viable” there is no guarantee that it won’t decide to sell overseas operations.
Holden could operate as a standalone business, although it would need the support of lenders.