General Motors could be facing liquidation if the automaker’s ‘good’ assets are not approved for sale by July 10th. The U.S. Treasury Department has the option to pull GM’s restructuring financing if a bankruptcy court fails to approve GM’s asset sale by July 10th.
President Obama originally set the July 10th deadline to ensure a speedy sale, but that date is now looming large as several parties are objecting to GM’s asset sale. Although unlikely – given the U.S. government has already pledged $50 billion to save General Motors – the Detroit-based automaker could be forced into liquidation if no deal is made.
GM spokeswoman Renee Rashid-Merem told The Detroit News that while it is possible for the Treasury to pull its funding, “logically there wouldn’t be strong motivation to stop funding given its investment in GM and the progress made to date.”
U.S. Bankruptcy Judge Robert Gerber has yet to rule on the asset sale – as testimonies are ongoing – but will have to give his verdict in the coming days. If approved, thousands of entities owed money by GM – including union retirees and victims of defective products – will be left behind with the ‘old’ GM in bankruptcy.
