WORLD> GM Goes Bankruptcy
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WORLD> GM Goes Bankruptcy
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US judge approves sale of GM assets
(Agencies)
Updated: 2009-07-07 14:17 Gerber said the dissenting bondholders' argument that GM could have restructured itself under a more traditional Chapter 11 reorganization plan, in which creditors would have been able to vote, was unrealistic. "As nobody can seriously dispute, the only alternative to an immediate sale is liquidation -- a disastrous result for GM's creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates," Gerber wrote. "In the event of a liquidation, creditors now trying to increase their incremental recoveries would get nothing."
"The US Treasury, in making hard decisions about where to spend its money and make New GM as viable as possible, made business decisions that it was entitled to make," Gerber wrote. The "old GM," which includes unpopular brands and unneeded factories and liabilities, will remain behind in bankruptcy court to be liquidated. The bondholder group on Monday said it will likely forgo an appeal to challenge the sale, largely due to the costs of pursuing an appeal. "The entirely new and expensive level of commitment that would be needed is regrettably beyond our means," Hal John, chairman of the Unofficial Committee of Family & Dissident GM bondholders, said in a statement. More than 50 percent of GM's bondholders had supported the deal, and the dissenting group was composed of only 3 individual bondholders, who said they represented the interest of more than 1,000 bondholders who felt left out of the process. An attorney for a group of individual consumers with product liability claims against GM filed papers with the bankruptcy court to appeal the sale order early on Monday. While "New GM" has agreed to take on future claims from such victims, the sale would leave these current lawsuits with little recourse. In his opinion, Judge Gerber said the liability objection was the only "truly debatable" issue in the case; but citing Chrysler's sale as a precedent, he ultimately agreed with GM that it was necessary to allow the company to leave such claims behind it. TREASURY FUNDING The US Treasury has agreed to provide $60 billion in financing to the new company, including a proposed $50 billion giving it a 60 percent stake in the company. The UAW would gain a 17.5 percent stake, the Canadian government about 12 percent and GM bondholders about 10 percent of the new company. At a three-day sale hearing that concluded July 2, the dissenting bondholder group and some individual bondholders representing themselves had objected to the deal, but no bidders presented an alternative. An auto task force official said earlier this month that the government could conduct an initial public offering for the "New GM" as soon as 2010.
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