General Motors Declares Bankruptcy – the Biggest Manufacturing Collapse in History

General Motors has officially declared itself bankrupt – the largest bankruptcy filing by a US manufacturing company.

The 101-year old car maker, once a symbol of America's industrial prowess, has sought legal protection from its creditors after running up losses of $81bn (£50bn) over four years. Its bankruptcy petition has just been filed in a federal court in Manhattan, New York.

Until it was overtaken by Japanese rival Toyota last year, GM had been the world's largest manufacturer of cars. But crippling employee pension and healthcare liabilities, and a failure to switch to making smaller, more fuel efficient vehicles, sealed its fate. It is the world's third largest bankruptcy to date, after Lehman Brothers and telecoms firm Worldcom.

Securing Chapter 11 bankruptcy protection gives GM breathing space from creditors, allowing the chief executive, Fritz Henderson, to try to turn GM into a viable business. The US government will pump $30bn into the company in return for a majority stake.

At the end of last year, the crippled firm had $176.4bn (£107bn) of liabilities and $91bn of assets globally.

Later today, in a televised speech from the White House, 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.