By Don Miller

General Motors Corp. (NYSE: GM), humbled by competition and battered by a withering recession, filed for Chapter 11 bankruptcy protection yesterday (Monday), where it will tap $50 billion in U.S. government financing to launch itself as a new company.

Once seen as the face of American economic might and industrial technology, 100-year old GM will try to reconfigure itself into a leaner, more profitable business. The company will be forced to lay off 20,000 workers, and close down 11 manufacturing plants.

GM was the world’s biggest automaker for 77 years, but the company has lost an aggregate $82 billion over the past four years even as it slashed production capacity, nameplate brands, and more than 100,000 U.S. jobs. The company that once had over 500,000 workers will likely bring its domestic employment down to 72,500 jobs by 2012.

GM plans to rebuild itself around its Chevrolet, GMC, Buick and Cadillac brands, which are seen as successful assets, and are expected to exit bankruptcy in sound financial health within months.  It will close or sell its Pontiac, Hummer, Saturn and Saab holdings, and divest other liabilities in a lengthier court-supervised reorganization.

“Today marks a defining moment in the reinvention of GM,” President and Chief Executive Officer Fritz Henderson said in a statement. “The economic crisis has caused enormous disruption in the auto industry.”

“It’s been a long time coming, but the reality of a GM bankruptcy is still a bitter pill to swallow — it’s a bit like the Titanic sinking,” Stephen Pope, chief global strategist at Cantor Fitzgerald in London told Bloomberg News. “This is a step they should have taken more than a year ago, which could have put them in much better shape before the economy went down.”

GM’s bankruptcy will be the fourth largest in U.S. history and the largest ever by an industrial company, according to Bloomberg. The company has a reported $82.3 billion in assets and $172.8 billion in debt.

The U.S. government plans to bankroll the “new” GM with an additional $30 billion in financing. That brings the government’s total investment to roughly $50 billion, which it will convert to a 60% stake in the new company. 

In a last minute change to the bankruptcy plan, Canada agreed to provide $9.5 billion in funding and would get a 12% stake.