General Motors Corp. has won court approval to sell its best assets to a government-owned company, paving the way for a swift exit from Chapter 11 bankruptcy less than 40 days after the corporation filed for protection.
The U.S. flag flies at the Burt GM auto dealer in Denver June 1, 2009. General Motors Corp. has won court approval to sell its best assets to a government-owned company, paving the way for a swift exit from Chapter 11 bankruptcy less than 40 days after the corporation filed for protection. [Xinhua/Reuters photo]
According to a Detroit News report, U.S. Bankruptcy Judge Robert Gerber said in his 95-page ruling late Sunday that "GM cannot survive with its continuing losses and associated loss of liquidity, and without the governmental funding that will expire in a matter of days."
"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," the judge said.
Gerber ruled that liability claims pending before GM filed for bankruptcy can be classified as bad assets and left behind in bankruptcy.
The judge ruling came three days after the automaker requested approval of the sale during a three-day hearing in Manhattan.
Once the sale closes, which was not expected before noon Thursday, the 100-year-old automaker will be majority owned by the U.S. Treasury Department.
The government will have a 60.8 percent stake after providing more than 50 billion U.S. dollars in financial aid to prevent the iconic American company from liquidating and becoming perhaps the greatest industrial failure in the nation's history.
The sale will preserve hundreds of thousands of GM jobs in North America and around the world, and bolster a reeling network of auto industry suppliers. But it also means a continued dismantling of GM's unwanted brands, factories, debts and liabilities that the government deemed commercially unnecessary.
Barring a successful last-ditch appeal by creditors to block the sale, the Treasury Department, through its Vehicle Acquisition Holdings LLC, would be able to close on the deal after noon Thursday.
GM and the Treasury Department had asked Gerber to make his ruling effective immediately, allowing the sale of GM's assets to close as early as Monday, but under the order, GM and the Treasury Department are not authorized to close the deal until after noon on Thursday, giving objectors a last chance to appeal and win a court stay.
Gerber rejected objections filed by key creditors, including consumers, asbestos victims, and retirees from three unions -- the International Union of Electricians, the Steelworkers, and the Operating Engineers.
GM's swift exit from bankruptcy was considered nearly impossible due to the automaker's complexity, size and the number of creditors who were expected to fight a court-ordered restructuring.
President Barack Obama's administration pushed for court approval of GM's asset sale by Friday, warning that it would not offer the automaker any additional aid after that deadline. The administration has already given GM about 27 billion dollars and has committed to total support of more than 50 billion dollars.
(Xinhua News Agency July 7, 2009)