July 11, 2009 General Motors emerges from bankruptcy Play video

(NECN: Peter Howe, Boston/Norwood, Mass.) - In just 40 days, General Motors has gone through bankruptcy reorganization and shed billions in debts and obligations, not to mention entire brands like Pontiac, Saturn, Hummer, and Saab.

But the economy stinks for selling cars -- and G.M. now has a potentially very challenging majority owner: The American taxpayer, thanks to a 61 percent stake the U.S. government inherited in the company. G.M. is also in hock to U.S. taxpayers for $50 billion in life-sustaining loans.

"It's an exciting day for G.M.,'' CEO Fritz Henderson said Friday as head of the no-longer-bankrupt General Motors. "We deeply appreciate the support we've received, and we will work hard to repay the trust and money that so many have invested in G.M.''

The new company's just four divisions: Chevrolet, Cadillac, GMC, and Buick. It's vowing to better focus on what customers want and use new sales channels like eBay bidding for cars.

Boston bankruptcy expert Victor Bass of law firm Burns & Levinson LLP says it's remarkable how fast G.M. went through reorganization. "What was done here is extraordinarily fast, especially for a case of this size and complexity ... 40 days is remarkable and quite unusual,'' Bass said, but not entirely unprecedented given recent cases where huge bankruptcy reorganizations went through much more quickly than small- or medium-sized companies. "The most notable thing that made it possible was both pressure from

Norwood, Mass., Village Cadillac Hummer Saab's Tim Lerchenfeldt has both worked for G.M. as an employee over all the years and sold almost all its brands as a car dealer. "It's a fresh start. All that's behind us now. There's no more discussion about bankruptcy. We're ready to go forward. It sort of puts the pressure on G.M. to perform. All the excuses are gone.'' Lerchenfeldt says in his view the key challenge for G.M. is to build on recent successes in making higher-quality cars at a price consumers like.

Howe: While it is indeed a happy day for G.M., this transformation also raise some uncomfortable questions. Like: Will taxpayers make their money back? Will government agencies, huge customers in the car market, now be under pressure to buy G.M. vehicles instead of Ford or Chrysler? And will 435 members of Congress start meddling in G.M.?

Congressman Barney Frank recently made a call to Henderson successfully lobbying him to delay the closing of a Norton, Mass., G.M. parts warehouse -- a move that was hailed by local workers who are getting to keep their jobs for several months longer, but which also alarmed some free-market advocates who saw it as a dangerous precedent for congressional micromanaging of a company that's now majority-owned by and deeply in thrall to the government -- and still has to make hundreds of painful decisions about closing plants and dealerships and laying thousands of workers off.

Lerchenfeldt said the worry about political interference in G.M. is "absolutely in the back of all our minds. We haven't been here before. We are dealing with people who don't know the car business, and we don't want them interfering.'' President Obama's administration, he noted, has said it wants to unwind the public stake in G.M. as fast as is prudent. "That's their claim, that they want to be out of the business, and we'd like them all out,'' Lerchenfeldt said.

Bass says, "Legally they're a long way out of the woods, and in a business sense, they're part-way out of the woods ... They have emerged from bankruptcy into a really tough competitive environment.''

G.M. is saying it will be profitable, before taxes, by 2011 as a result of its massive restructuring, and Henderson promised Friday the company will repay its $50 billion taxpayer loan before the 2015 deadline. But the big unknown in whether taxpayers make money out of this deal, as they did from bailing out Chrysler Corp. in the late 1970s: What happens to the value of G.M. stock -- and when, and at what prices, do Obama Administration "car czar" officials choose to sell that stock?

One change G.M. is not making: Henderson denies they're planning to change the color of their logo from blue to green, which many industry observers were expecting and speculating about as a possible nod to the Obama administration's demands G.M. start producing more small fuel-efficient cars and hybrids. It'll continue to be the big blue square GM logo.