The sale of GM’s assets to a new corporate entity was approved Sunday night by a bankruptcy judge in New York, ahead of a July 10th deadline imposed by the U.S. Treasury. Judge Robert Gerber wrote in his ruling the sale will allow GM’s healthy assets to avoid “immediate and irreparable harm.”
The ruling marks another milestone in the Obama Administration’s plan to rescue General Motors. The sale of Chevrolet , Cadillac , Buick , and GMC to the “New GM” will separate the company’s strong operations from the defunct brands, excess dealers, and expensive contracts that have burdened GM for so long.
But there are still hurdles ahead. Those who stand to lose millions — bondholders and shareholders, for example — could pose a big problem. Although lawsuits failed to scuttle the formation of the “New Chrysler ” last month, GM is still at risk from such action.
That said, the ruling should be sufficient to ensure capital continues to flow from the Treasury Department to GM. The Treasury warned it would cut off funding to the General by July 10th if a sale was not approved.
The new General Motors will be owned mostly by the U.S. government, which will hold a 60 percent stake. The Canadian government will own 11.7 percent of the company, while the UAW will get a 17.5 percent share.
The old GM will be liquidated to help repay some of its debts, before fading away forever. Its properties will include Saab , Saturn, and Hummer, all of which appear to have buyers. Divisions like Pontiac and Saturn will also fall under the “Old GM” umbrella, though they might simply dissolve. Other assets, like 14 shuttered production facilities, will also be liquidated.
