DETROIT, May 31 (UPI) -- General Motors Corp. is set to file for bankruptcy protection and restructure its operations under the control of the U.S. government, industry sources said.
GM is expected to file for bankruptcy in New York Monday, and President Barack Obama is scheduled to deliver a speech Monday morning announcing his support of the action, The New York Times reported Sunday, citing sources with knowledge of GM's plans.
GM's decision comes after a severe global economic turndown that led Chrysler LLC to seek bankruptcy protection April 30. Beginning with its first federal loans during the Bush administration in December, GM has received more than $19 billion to date in U.S. loans and the government will likely spend at least $30 billion more as part of the reorganization to be announced Monday, the Times said.
The filing comes after a majority of investors holding $27.2 billion in GM bonds agreed Saturday to exchange the debt for stock and said they would not challenge bankruptcy filing.
Obama administration officials expect GM to come out of bankruptcy in a matter of months as a much smaller company owned by the U.S. government, the United Automobile Workers union and GM bondholders, the newspaper said.
John Casesa, an industry consultant and former Wall Street analyst, told the Times the collapse of GM is "a national tragedy."
"Fortunately, the government has been decisive and remarkably quick in salvaging what's worth saving," he said.
The restructuring plan calls for GM to eliminate more jobs, cease production of some brands and models and slash the number of dealerships that sell GM products.
Under the plan, the United Automobile Workers union, vthrough its retiree healthcare fund, would receive a 17.5 percent stake in a restructured GM and warrants to buy an additional 2.5 percent, sources told the Times. Bondholders initially would receive a 10 percent stake, along with warrants for 15 percent.