General Motors to Declare Bankruptcy Within Hours

General Motors, once a symbol America's industrial prowess, will declare itself bankrupt within hours, in the largest-ever bankruptcy filing for a US manufacturing company.

The 101-year old carmaker will seek legal protection from its creditors after running up losses of $81bn (£50bn) over four years. Its bankruptcy petition is due to be filed in a federal court in Manhattan around 1pm London time, before the US markets open.

In a televised speech from the White House just before 5pm London time, President Barack Obama will detail rescue plans for what was once the nation's largest and most successful company. It is hoped that a streamlined "new GM" will emerge from bankruptcy by August.

The Obama administration's efforts to keep GM afloat have become increasingly unpopular. The government has already advanced $19bn of taxpayers' money to the company and a Rasmussen opinion poll published over the weekend showed 56% of Americans thought it would have been better simply to let GM go out of business – a prospect that, Obama says, would have "horrendous effects" on the overall economy.

Tapping into popular concern about the cost of aid, the Republican Senate leader, Mitch McConnell, said Obama should simply have allowed GM to file for bankruptcy last year rather than spending billions to try to improve the company's health: "I think the auto bailout was a big mistake."

Under a proposed carve-up to be put before a bankruptcy judge, the US government is likely to get a stake of 70% in the company in return for further state aid of up to $30bn. The United Auto Workers union will initially get 17.5%, accepting shares in lieu of cash owed by GM to fund retired employees' healthcare cover.

In a boost to the chances of a swift restructuring, a majority of GM's bondholders have accepted an offer to swap their $27bn in debt for an initial stake of 10%, plus warrants allowing them to increase their ownership of the company to 25%.

To date, the bondholders have been tough negotiators, complaining that they are being unfairly treated. Analysts say that the carve-up gives them shares worth little more than 10 cents for every dollar they are owed by GM. Their tentative agreement to the deal lessens the chances of a long, drawn-out wrangle, which could keep GM tied up in the bankruptcy courts for many months.

But GM Bondholders Unite, which represents some individual investors who bought GM's bonds, still plans to fight the reorganization plan.

Under bankruptcy, GM will continue to manufacture and sell cars, but a judge will rule on competing claims over its assets from the government, unions and lenders.

GM's chief executive, Fritz Henderson, is hoping for a swift reorganization allowing a slimmed-down version of the Detroit manufacturer to emerge from bankruptcy within 60 to 90 days.

On Sunday, rival car maker Chrysler won court approval for the sale of the bulk of its assets to a group led by the Italian car maker Fiat. Chrysler filed for bankruptcy protection on 30 April and its swift re-emergence has raised hopes that the GM rescue, although more complex, will also be fast-tracked.