The Chapter 11 filing of General Motors on June 1 marked the biggest bankruptcy of an industrial company. The collapse of this blue-chip US industrial icon and the approach taken to restructure its balance sheet highlights some of the new methods used by US companies to stay solvent.
The US is renowned for its bankruptcy code, which embodies the country’s enterprise culture, giving companies that fail a second chance. Chapter 11 allows companies to reorganise their operations and finances while being protected from their creditors. Last year the code celebrated its 30th year and while some restructuring specialists say the process can be protracted and expensive, it is the framework many other countries still look to mimic.
