GM could be liquidated if sale not approved
July 3, 2009 by Matt Brogan
A US federal bankruptcy judge will decide the immediate fate of General Motors’ effort to quickly sell its best assets to a group funded by the US government, after a three-day court hearing that concluded yesterday.
The iconic manufacturer wrapped up the final day of its sale hearing in US bankruptcy court in Manhattan by asking Judge Robert Gerber for approval to sell its best assets to a “New GM” funded by the US government.
GM is seeking approval for the sale just one month after filing for bankruptcy protection. Judge Gerber asked GM’s attorneys to submit papers to him by Friday and is expected to rule before July 10, the date after which the government has said it could stop funding GM.
In court on Thursday, a group of dissenting bondholders urged Judge Gerber to block the sale, calling it the first attempt at “Chapter 11 nationalisation” and arguing the government was trying to circumvent the law.
However, GM’s lead bankruptcy attorney, Harvey Miller of law firm Weil, Gotshal & Manges, told Judge Gerber that anything but approval of the sale would have “catastrophic” and “irreversible” consequences for GM and the auto industry.
“The objectors are asking your honour to play Russian roulette,” Mr Miller told Judge Gerber, in response to claims from the bondholder group that GM could pursue a more traditional Chapter 11 reorganisation plan rather than a fast track sale.
“These are assets that will deteriorate in value, and that deterioration will be felt by all stakeholders,” Mr Miller said, noting that June vehicle sales this week showed GM was losing market share to Ford.
This week GM’s chief executive, Fritz Henderson, and Harry Wilson, a senior member of the Obama administration’s autos task force, told the court the sale was GM’s only option for survival. Mr Henderson said he did not expect GM to make money in 2009.
If the deal were approved, “New GM” plans to operate the best parts of the old company, such as Chevrolet and Cadillac, with a less-expensive workforce, smaller dealer network, and much less debt.
The “old GM,” which would include unpopular brands and unneeded factories and liabilities, would be liquidated in bankruptcy court.
Source: Reuters
Print it: 
Just get it over with already. There just letting “the Old GM” to cough up more blood. Either bury them already or pump billions more into a lost cause. I want only Holden SAAB and Opel to survive and form their own alliance. Holden= Large cars. Opel= Tech, and small cars. SAAB=Just for trying so hard with the 9-3
Shak…….Did you read the report on Holden on the AGE website? Holden are in massive trouble as well and there is no guarantee they will survive. They may well be the next casualty of the auto industry…….lets hope so. Dont believe the usual Holden spin……..they are in bigger trouble than anyone thought.
There is no way the US Government would let GM go into liquidation, it has already sunk too much money into GM and the public backlash if GM liquidated anyway would be epic. The stakeholders are just calling the Governments bluff, even if the decision isn’t made by 10 July, the Government will still open up the cheque book and extend the deadline.
People at Holden will be shaking in their boots when they get the real news that Holden and GM have kept them from hearing……..I wouldnt be buying a Holden or a rebadged Daewoo , thats for sure!!!!
Don’t you think it’s funny how Jeep can survive while GM can’t!
i did Limited Slip, and it made me sad. I said i wished they would survive, but its looking less likely by the day. I mean now their pegging the Cruze at us. Although its a Korean car it did stack up well in a recent comparison by WHEELS mag. It cam fourth to the Golf, 3, Focus.
Now I’m not a Holden fan, but lets not panic too much.
I think you might find that the info the Age story was based on is now 6 months old (but only just now released), and that GMH is OK as a going concern at the moment.
The Aus motor industry, whilst just a little shaky like the rest of the world, will be fine for the next 5-10 years. Beyond that, who knows.
Foremost in the minds (with the caveat that they actually have minds) of those whom are considering buying the mutant Korean/Australian manifestation of Obama Motors Inc. is; who will honour the warranty in a few years…
Thanks for calming me down DesignEng.
Whilst so many of you shun GM and the Obama consortium, you all seem to be overlooking the real wrong doers here. The legal fraternity are making billions out of all of these Chapter 11 and company buyouts / amalgamations etc. I read somewhere recently that a finacnial consultancy firm employed soon after the demise of Wagoner cost GM 125Mill US and couldn’t come up with a restructuring plan. (They still got paid though!). Take these courtroom Jockeys out of the picture who arre looking for every little loophole to argue about (remember the longer the argument the better the income @ $1,000.00+ US and hour)
Frontman, the lawyers always win. Wish I had chosen that profession some years ago. My maternal grandfather always held them in great disdain…but we won’t go there.
Looks like they are not out of the “s” just yet.
The GovCo has NO right to be involved with any private enterprise, where were they when PanAm was dying?
U can see in Germany that the GovCo will not be bailing out porker/vw.
Let old/new GM & H die, or they can do a alliance with somebody else….hello FIAT?
Cheers
F-0
I just feel sorry for all the suppliers to the ‘Old GM’ who will surely never get paid their money from unpaid bills and contracts once the ‘valuable’ assests are sold to the ‘New GM’
Holden are far far far from a viable concern just yet…..I think we are in for a big shock in the near future…..
i wonder what odd’s one could get on g.m. being liquidated when obama own’s it.do i hear “national security”…
I think Holden will survive even if the worse happens to GM. Rudd will give Obama a call and mention our shared history. As a last resort he will beg and throw money in.
They should have one more life left.
The same old spin from the same tired old Ford fans
The bottom line is Holden will survive unfortunately and so will the Commodore because our Government, labour or liberal will keep propping them up with our taxes.If any one car being built here is in troube its the Falcon, I truly believe the Falcon will be replaced with the Taurus but one with cosmetic changes to Australian tastes.
Jon, you are wrong. The Falcon will not be replaced by Taurus. Head of Ford Motor Worldwide engineering, Derek Kuzak, said the Falcon is iconic and is RWD. The unbelievable good Falcon i6 motor is safe up to Euro5 which comes in 2015. So, Falcon is safer than GMH C’dore as far as future planning goes.
For those that haven’t read the Age article. It has facts which suggest that the GMH liabilities currently exceed net worth by $250M and that was at the end of 2008 calender year. They predict it is much worse now. Ie exports have dropped by 83-85% depending on where you read, C’dore sales are down 11% this year and upcoming expenses for Cruze have yet to be paid. Ouch, ouch, ouch.
PS The new saviour, the Cruze, just this month was rated 4th best small car by Wheels mag. VW Golf (new), Mazda3 (new) and Focus (5yrs old) beat it.
Sorry Phil C I don`t agree, but only time will tell I guess.
Phil C that is correct.
Frontman said: “I read somewhere recently that a finacnial consultancy firm employed soon after the demise of Wagoner cost GM 125Mill US and couldn’t come up with a restructuring plan. (They still got paid though!).”
Since when have financial consultancy firms been part of the legal fraternity? Do you realise the bulk of the lawyers involved are actually in house; ie employees of GM itself?
Shak…….Did you read the report on Holden on the AGE website? Holden are in massive trouble as well and there is no guarantee they will survive. They may well be the next casualty of the auto industry…….lets hope so. Dont believe the usual Holden spin……..they are in bigger trouble than anyone thought.