Bankruptcy Judge Approves Sale of Best Assets to New GM

July 6, 2009

(ChattahBox) — General Motors Corp. has cleared perhaps the last major hurdle, as a bankruptcy judge has ruled it can sell the bulk of its assets to a new company with the US Government holding a majority stake, likely clearing the way for the automaker to quickly emerge from bankruptcy protection. Under the rescue plan, GM’s core business will emerge under state ownership while the unprofitable divisions will be liquidated.  The Obama admin successfully used pressure tactics to get a fast ruling, having threatened to stop funding GM if the sale was not approved within 10 days.
In his 95-page opinion, Judge Robert Gerber, said the sale was necessary to “prevent the death of the patient on the operating table.”  The new GM, which sought bankruptcy protection on June 1, will emerge as a significantly leaner automaker with far less employees and fewer brands offered.

Judge Gerber’s decision can still be appealed by GM’s creditors but otherwise may be completed this week.  Unlike the Chrysler situation, GM bondholders objecting to this deal are unsecured. which likely means they will have not have much chance of overturning this ruling. The government, which is financing the reorganization, had given GM until Friday to win approval for the sale or risk losing its bankruptcy financing. Under the terms of the revised deal, GM would sell its good assets, including the Chevrolet and Cadillac brands, to a new company owned largely by the American and Canadian governments. The Obama administration hopes to take the company, which will still bear the General Motors name, public next year.

Source: Detroit Free Press


2 Responses to “Bankruptcy Judge Approves Sale of Best Assets to New GM”

  1. Lucky Luck » Bankruptcy Judge Approves Sale of Best Assets to New GM … on July 6th, 2009 7:32 am

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