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GM bankruptcy plan approved
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While a lot of us were still celebrating the 4th yesterday, the bankruptcy court in NYC was hard at it hashing out plans for GM.
The upshot? Judge Robert Gerber of the U.S. bankruptcy court in Manhattan approved a restructuring plan that allows General Motors to sell some of its prized assets to a new, government backed company. He said the sale would "prevent the death of the patient on the operating table." This approval is a critical step in GM’s travels through the bankruptcy system, and came after three days of hearings to address over 800 objections to the plan. Additional pressures came from the US government, which is giving GM a tight time frame of July 10 to approve the reorganization plan or risk losing the financing provided by the government.
The sale marks the second big victory for the Obama administration's auto task force. It helped broker the disposal of Chrysler LLC to a group led by Italy's Fiat SpA last month.
Gerber issued a four-day stay of the order approving the sale, which should allow it to close as early as Thursday. Such stays are typical and allow for possible appeals.
Under the deal, 'New GM' will operate the best parts of the old company, including its Chevrolet and Cadillac brands, with a less expensive workforce, smaller dealer network, and much less debt. This new company is owned largely by the American and Canadian governments and a health care trust for the United Automobile Workers Union. The rest of the company will be liquidated.
"GM cannot survive with its continuing losses ... and without the governmental funding that will expire in a matter of days," Gerber wrote in the 95-page opinion.
The 'old GM', which includes unpopular brands and unneeded factories and liabilities, will remain behind in bankruptcy court to be liquidated.
Source: NY Times; Reuters
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