Monday, July 6, 2009

GM Wins Approval to Sell Most Assets to U.S. Treasury

July 6 (Bloomberg) -- General Motors Corp. won approval to sell most of its assets to a U.S. Treasury-funded buyer, cementing the Obama administration’s efforts to remake the auto industry and leaving restructuring professionals with several years of work to liquidate the leftovers.

U.S. Bankruptcy Judge Robert Gerber in New York issued his ruling yesterday saying the proposed sale was the only option available to the struggling Detroit-based automaker. He largely followed the ruling of his counterpart on the Manhattan court Arthur Gonzalez, who approved the sale of most of the assets of GM’s smaller rival Chrysler LLC.

“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 said in an 87-page opinion. “In the event of a liquidation, creditors now trying to increase their incremental recoveries would get nothing.”

A group of bondholders, tort claimants and unions having their retiree benefits slashed had objected during three days of hearings on the sale, saying the so-called “new GM” to be majority-owned by the U.S. government is just “old GM” stripped of liabilities. The company will sell the same cars and trucks, have the same workers and the same executives. ....More

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