GMAC to Continue Operations During GM’s Bankruptcy
On the heels of General Motor’s Chapter 11 bankruptcy filing on Monday, GMAC Financial Services issued a statement saying it is taking the appropriate steps to protect its interests during the troubled automaker’s restructuring.
On the heels of General Motor’s Chapter 11 bankruptcy filing on Monday, GMAC Financial Services issued a statement saying it is taking the appropriate steps to protect its interests during the troubled automaker’s restructuring.
Looking to avoid the uncertainty that clouded Chrysler Financial when Chrysler LLC filed, GM submitted a motion to the U.S. bankruptcy court that, pending approval, would allow all of its direct business with GMAC to continue as it attempted to emerge from bankruptcy.
“GMAC continues to provide automotive financing products and services to GM and Chrysler dealers and customers, including retail auto originations, wholesale financing, insurance products, and servicing of customer loans,” read a statement issued by GMAC on Monday. “The company's non-automotive activities also continue uninterrupted.”
GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industry company. The company said it has $172.81 billion in debt and $82.29 billion in assets.
As it reorganizes, GM will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That’s in addition to nearly $20 billion in taxpayer money GM has received in the form of low-interest loans.
Through the reorganization the federal government will take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, while the United Auto Workers union would own 17.5 percent. The remaining 10 percent would be held by unsecured bondholders, while all existing GM shareholders were expected to be wiped out.
With most auto observers expecting GM to enter bankruptcy by its June 1 deadline to present a viability plan to the presidential automotive task force, it was clear early on that GMAC would not face the same uncertainties surrounding Chrysler Financial after Chrysler LLC filed for bankruptcy on April 30.
Shortly after Chrysler announced its filing, a representative of the Obama administration said GMAC would become Chrysler’s preferred lender, a union that included a four-year deal for incentivized retail financing.
The Treasury Department followed up the government’s endorsement by agreeing to a $7.5 billion capital investment for GMAC, $4 billion of which would go toward financing Chrysler’s retail and dealer customers. The deal was approved by the U.S. bankruptcy court on May 12.
GMAC, which had received $13.5 billion up until that point, also gained approval by the Federal Deposit Insurance Corporation (FDIC) to participate in the Temporary Liquidity Guarantee Program (TLGP), as well as an expanded exemption granted by the Federal Reserve to originate GM-related assets at GMAC’s bank, which will operate as Ally Bank.
As for Chrysler Financial, which had temporarily suspended floorplan financing and participation in subvented annual percentage rate (APR) programs, Chrysler’s bankruptcy filing put into jeopardy several of its lender agreements. And while the company resumed subvented APR program on May 20, officials said negotiations with creditors is ongoing.
Chrysler Financial has given no indications that it would follow Chrysler into bankruptcy, and GMAC officials said Monday that the company has not intentions of do so either. “GMAC is a bank holding company with a newly appointed board of directors and a diversified ownership structure,” read a statement from the company. “GMAC has not filed for bankruptcy, nor does it intend to, and the company continues to meet all of its obligations.”
More Auto Finance

Dealerships Are Paying the Price for Extended Car Loans
Growing negative-equity scenarios mean such lengthy terms should be addressed in a forward-looking way to make them work for the dealer and the consumer down the road.
Read More →
Trade-Ins in Negative Equity Reach New Heights
As such trade-ins rise in frequency, so do monthly loan payment amounts and interest rates, according to second-quarter data compiled by Edmunds.
Read More →
Auto Credit Plentiful
June numbers show lenders are readily granting access, including to risky borrowers, as consumers leverage themselves to take on high prices.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Porsche Financial Services Shifts Structure
After 36 years with Porsche, the Financial Services Chief Financial Officer Konrad Riedl is retiring, and the department is realigning its management structure.
Read More →
Tariffs Could Raise Insurance Premiums
As U.S. import tariffs affect repair costs, consumers might find it more affordable to replace a damaged vehicle, according to recent Insurify tariff analysis.
Read More →
Smaller Loans, Longer Terms
The youngest generation of car buyers is more likely to finance less expensive vehicles, more than half of generation Z consumers borrowing less than $25,000.
Read More →
New Cars a Tad More Affordable
May averages show that combined circumstances gave auto consumers slightly better buying power for the month, though average prices were up year-over-year.
Read More →
First-Quarter Sees Long Auto Loan Growth
Experian data show more consumers are tapping the method, along with refinancings, to afford buying. Meanwhile, subprime borrowers are getting more access.
Read More →
Mastering Credit Friction
In this video, Josh Krach explains how to turn credit friction into an advantage.
Read More →