As General Motors Goes Bankrupt- Proverbs 11:28

“He that trusts in his riches shall fall: but the righteous shall flourish like a branch.” –Proverbs 11:28

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It is hard to imagine that a company as large as General Motors USA, manufacturer of Chevrolet, Cadillac, GMC, Buick, Pontiac, Saturn, Hummer, and Saab would succumb to financial crisis. It has been leading the car manufacturing industry in the USA for at least a hundred years, of course along with Ford USA.

According to an article from Associated Press, General Motors filed for Chapter 11 bankruptcy protection, which consists of a plan to reduce the automaker to a sustainable size and give the majority ownership to the federal government, which is 60 percent of the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers gets a 17.5 percent share and unsecured bondholders receiving 10 percent. However, the rehabilitation plan of the company would wipe out all existing GM shareholders… GM’s bankruptcy filing is the fourth largest in US history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets… The GM’s downsizing would be limited to the following brands: Chevrolet, Cadillac, GMC and Buick. For the Pontiac, Saturn, Hummer and Saab operations, they would either sell or close them down. GM further said that it is finalizing a deal to sell Hummer, and they will announce the plans for Saturn later.

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The article further stated that GM has employed 618,000 Americans in 1979, which is more than any other company has done. Now, they need to cut down labor and overhead costs to keep the company afloat, which will affect its 61,000 hourly workers and 27,000 white-collar employees.

If $82B in assets were not enough to secure a large company like GM, how much would it take to secure a large company that has been operating for almost a hundred years? If ever it is a case of mismanagement, maybe I have asked the wrong question. It should have been, who? However, the US government itself has not prevented a recession, who then can guarantee that even a good manager would not make a wrong decision somewhere?
A large company as GM could not secure itself for a time of trouble, how could you secure yourself from bankruptcy?

Photo from:
http://www.uncrate.com/men/cars/sports-cars/2009-pontiac-solstice-coupe/

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