GM Poised To Declare Bankruptcy

This could be the most important week ever for General Motors. The deals have been set. Investors have spoken. And the company that was once the world's biggest automaker is believed to be hours away from declaring bankruptcy, reports CBS News correspondent Dean Reynolds in Detroit.

With a majority of its bondholders removing the last obstacle, General Motors is now poised to declare bankruptcy tomorrow - a sad chapter in what was once a great success story.

Time has not been kind to the company. In 1961, GM commanded 51 percent of the U.S. auto market, compared to 21 percent today. It once employed 618,000 workers (in 1979) but has fewer than 90,000 now and is heading toward 60,000 by the end of next year.

"There is a lot of tension. The workers here have been under a lot of stress all hoping and praying that the plant survives," said a GM worker in Tennessee.

"I don't know how i am going to survive. I may have to get another job, another income," said another GM worker. "I really don't know."

GM once had so many makes and models it was hard to keep track. Today it's trimming them as fast as it can, dumping Hummer and Pontiac among others.

Up to 40 percent of the dealers who had such a hard time selling these cars are being eliminated.

GM lost $6 billion in the first quarter of this year alone - $90 billion since 2005 - so bankruptcy would come as no surprise.

The plan is to have the government take over 72 percent of GM, with its chief union getting 17.5 percent and its creditors 10 percent, with the possibility of purchasing more down the road. Dealer warranties will be honored, but consumer enthusiasm for vehicles from a bankrupt manufacturer is anyone's guess.

GM has already received about $20 billion in government loans to stay afloat - most of it already spent with little hope of being recouped - and could get another $30 billion to help navigate bankruptcy. But that batch won't come without some government-imposed direction for the future.

"There will be a new, humbler, more practical approach at GM and GM management," said Ed Lapham, executive editor of automotive news.

But some analysts say when a government takes over an automaker it can be worse than risky.

"It doesn't work. We saw that in England in the 60s when the government became the biggest shareholder of British Leyland," Lapham said. "You know, within a decade it was gone."

The hope all around is that this will be a quick bankruptcy lasting no more than 90 days - something much like Chrysler's swift reorganization, which is expected to be completed as early as tomorrow.

  • Dean Reynolds

    Dean Reynolds is a CBS News National Correspondent based in Chicago.