Atlanta, GA 7/7/2009 2:20:56 AM
News / Business

Bankruptcy Judge Rules for General Motors (NYSE: GM) Sales Plan

A bankruptcy judge ruled Sunday that General Motors Corporation (NYSE: GM) can sell the bulk of its assets to a new company.


The ruling allows for GM to eventually emerge from Chapter 11 bankruptcy protection.


"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," U.S. Judge Robert Gerber wrote in his 95-page ruling.


An appeal is expected to be filed on behalf of people who have sued GM in several auto accident cases. The deadline for an appeal is noon Thursday, after which point Gerber's order takes effect and the sale is free to close.


General Motors has sold their Saturn, Hummer and Saab brands to other companies. The former assets of General Motors, known as Motors Liquidation Co., will be sold to the highest bidder under court supervision. The assets portfolio includes several properties, many of which are factories that are likely to be closed.


GM, whose Chapter 11 filing was the fourth-largest in U.S. history, is expected to receive $50 billion in taxpayer funds. GM received nearly $20 billion in taxpayer funds before its bankruptcy and, according to reports, the government has provided between $10 billion to $11 billion to finance the bankruptcy. An additional $19 billion in financing would be provided to GM by the end of the year, said Steve Rattner, the head of the Obama administration's auto task force.


In exchange for those funds, the government will own about 61 percent of the "new GM." The United Auto Workers (UAW) will own 17.5 percent of the new company and will name Stephen Girsky, a former GM adviser and Morgan Stanley analyst, to serve on the board. The Canadian government, which will control an 11.7 percent share, also will pick one member of GM’s new 13-member board.




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