In the largest industrial bankruptcy ever seen in US history, General Motors Corp., the top US automaker and once the world's largest corporation, filed for bankruptcy protection on Monday.

A piece of news about the General Motors Corp. filing for bankruptcy protection is seen on the front page of a newspaper in Detroit, the United States, June 1, 2009. The largest US automaker, General Motors Corp., officially filed for bankruptcy protection at 8:00 AM EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the US industrial history. [Xinhua]

The collapse of the century-old auto giant came at a time when the United States is experiencing the worst economic recession since the Great Depression. Just a month ago, Chrysler LLC, the country's third largest automaker, took the same path.

Hoping to reemerge from bankruptcy protection as a new, leaner company within 60 to 90 days, GM will close 14 US factories and three warehouses to slash its operating costs, affecting some 18,000 to 20,000 workers in nine states. It aims to bring down the total number of U.S. plants from the current 47 to 33 by 2012.

The GM bankruptcy, along with the previous one of Chrysler, will also lead to the loss of hundreds of dealers and suppliers as well as hundreds of thousands of jobs, dampening U.S. President Barack Obama and his administration's efforts to stimulate the slumping economy.

However, backed by the US and Canadian governments, GM warranty, service and customer support will continue uninterrupted during bankruptcy. Essential suppliers and employees will be paid in the normal course, according to GM President and CEO Fritz Henderson.

GM court filing also will not affect its overseas operations, including the GM joint venture in China, which said in an overnight statement to Xinhua that the impact "will be minimal to our China business including our operations and sales."

"We will maintain our normal business operations, including our suppliers system, dealers, warranty and customer support operations," it added.

For a company like GM whose importance and prestige were epitomized in once popular phrases like "What's good for General Motors is good for America" and "As GM goes, so goes the nation," its bankruptcy filing was anything but an ordinary case.

The U.S. government, which at the end of last year lent 19.4 billion dollars of taxpayer money to GM in a controversial bailout move, has played a key role in directing and pushing GM in key restructuring talks with auto workers' union and bondholders, to secure a smooth bankruptcy and quick revival.

Under the agreements reached in the last-minute countdown to the bankruptcy filing, creditors holding some 54 percent of GM bonds accepted a plan to swap US$27.1 billion in debt for a 10-percent stake in a reorganized "new GM" and warrants for an additional 15-percent stake. A retiree health care trust will get a 17.5-percent stake in the new GM and US$6.5 billion in preferred stock.

The liquidation of an iconic company like GM would cause "enormous damage" to the US economy, said President Obama in a brief statement live televised around Monday noon.

Therefore, he said, his administration is investing another US$30 billion to help the creation of the new GM, thus becoming the largest stake holder with a 60-percent stake. However, the president explicitly stated that he "has no interest in running" the new GM, which will be able to make decisions on its own.

As GM produces in 34 countries and employs 244,500 people worldwide, some foreign governments, out of concerns about plant closures and job losses, also came to the rescue.