‘Hands-Off’ Ownership

B-Day has finally arrived for General Motors Corp. The beleaguered automaker is set to seek Chapter 11 bankruptcy protection this morning, in a White House-scripted move meant to last 60 to 90 days.

There are a lot of stipulations of the bankruptcy, including a 50% reduction of GM’s liabilities and plans to close or idle 14 factories. The biggest proviso, though, is the government’s injection of $30.1 billion into the company in exchange for a 60% stake. (A side note: GM’s market cap on Friday was $457.9 million, less than 1% of the amount the government will have infused into the company when all is said and done.)

The government plans to manage its ownership stake in a “hands-off, commercial manner,” according to a fact sheet that outlines the restructuring. Further, “the government will not interfere with or exert control over day-to-day company operations.” I find those claims hard to believe. The government has essentially called all the shots to this point, and I can’t imagine that this case would be any different.

Brace yourself: The rough road we’ve been traveling until now is about to get rougher.