Updated from 12:49 p.m. EDT
, which filed for bankruptcy protection Monday, eventually run smoothly or is it headed into a ditch?
If all goes as planned, GM -- which today announced
-- will emerge by Sept. 1 as a slimmed-down company with less than half its current debt load as well as the ability to make money at lower domestic vehicle sales.
President Obama cited
, which over the weekend won court approval to sell most of its assets to Italy's
, as a good sign for GM.
"Some said a quick
Chrysler bankruptcy was impossible ... they were wrong," Obama said. He said critics predicted Chrysler sales would "fall off a cliff," and added, "they were wrong." Chrysler sold more cars in May than it did in April.
Obama said the GM bankruptcy was part of a "viable, achievable plan that will give this iconic company a chance to rise again."
Speaking at the White House, where he was flanked by Cabinet secretaries and economic advisers, Obama said the coming restructuring will "take a painful toll on many Americans" with the closure of additional plants and the loss of jobs.
The president said auto executives "will call the shots and make the decisions about turning this company around." He said the government would refrain from playing a management role in all but the most critical areas.
"What I am not doing, what I have no interest in doing, is running GM," Obama said.
"Our goal is to help GM get back on its feet ... and get out quickly," he said of the federal government.
Republicans aren't so sure of GM's path.
"The only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars," said House Republican Leader John Boehner of Ohio.
"Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability? It's time for the administration to fully explain what the exit strategy is to get the U.S. government out of the board room once and for all," Boehner said.
GM filed for protection under Section 363 of the bankruptcy code, which will allow it to speedily create a new company and transfer viable assets, as well as a tax-loss carryforward, to that company. It's the largest industrial bankruptcy in U.S. history.
GM plans to name Al Koch as chief restructuring officer as part of the bankruptcy filing. Koch, vice chairman and managing director of turnaround firm AlixPartners, served as chief financial officer at Kmart during its bankruptcy.
The Treasury will invest $30.1 billion in GM, providing financing through the bankruptcy process, and will initially hold 60% of the company, but it does not intend to stick its nose in everything the automaker does, officials said.
The new GM is intended to be profitable at a domestic vehicle sales level of 10 million cars annually, the official said. The current annual pace is about 9.5 million. The last time North American sales slipped below 10.5 million was 1982, when they totaled 10.3 million, according to J.D. Power. The last time they were below 10 million was 1970, when sales totaled 9.8 million, the firm says.
The outline of the GM bankruptcy plan is by now well known. The Treasury will hold about 60% of the company, the governments of Canada and Ontario will hold about 12%, a retiree health care trust for United Auto Workers retirees will hold 17.5% and unsecured bondholders will get 10%. Both the bondholders and the health care trust will hold warrants that would accumulate value if newly-issued GM shares increase sufficiently.
"Our agreement with the U.S. Treasury and the governments of Canada and Ontario will create a leaner, quicker more customer and completely product-focused company, one that's more cost competitive and has a competitive balance sheet," CEO Fritz Henderson said at a news conference in New York. "This new GM will be built from the strongest parts of our business, including our best brands and products."
And how will the massive level of government financial and strategic assistance to the GM bankruptcy impact
, the only one of the Detroit Three that is not getting a chance to restructure under court protection from creditors?
"Ford has ample financial resources (and) has been very successful in maintaining and growing market share," the senior official said. "We do believe (that) this country can support three domestic and viable auto companies."
Shares of GM were trading up 9 cents to 84 cents after 2 p.m. EDT.
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