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.
07/06, 7:07 AM
posted by:
carstuff
VERY interesting read. Pretty much nails the issues on the head w/o all the BS heard here and everywhere.
If it goes like Chrysler, and it will, there will be no issues.
New GM will be out of bankruptcy by the end of the week. It will have cleansed itself of lots of debt, cut its UAW manpower by 10,000’s, cut its’ salaried by 1000’s, gotten rid of unneeded plants, cut brands, cut, cut, cut.
The big telling here will be the burn rate at the end of the 3rd quarter. From reports it looks like they will significantly lower the outlays and most likely will have a MUCH lower burn rate than any other large OEM.
07/06, 7:42 AM
posted by:
mayer_ray_nagin
LMAO @ carstuff who apparently read 95 pages of legalese BS.
I can get good äss downtown and I dont need no stinkin judge to do it!
07/06, 8:05 AM
posted by:
carstuff
Actually not written in legalese. Try it.
07/06, 8:27 AM
posted by:
bauer100
dont expect anyone here to actually read the judgement. it will just be 50 comments of GM bashing and “haha! governement owns GM!”
07/06, 10:02 AM
posted by:
2WheeledSpeed
I agree with bauer100 on that…
07/06, 10:36 AM
posted by:
johnnycanuck
mayer_ray, now that at least is a good return on your investment.
07/06, 10:39 AM
posted by:
Bubs Solo
So are their shares still worth squat or what’s the story there?
07/06, 11:31 AM
posted by:
Ed103
GM sucks! Now the governments owns them! Hahahaha!
07/06, 12:30 PM
posted by:
reedfast
with all this nipping and tucking GM is going to start resembling Dolly Parton.
07/06, 12:33 PM
posted by:
ricky_b
Where’s the blogger with the GM pom-poms?
You know, if you did the math, if GM had already shed the divisions on the block and you relooked at June 2009 US sales figures, Ford would have outsold GM.
PS. I don’t think this backruptcy is going to go as quickly as they planned and it’s going to be quite the uphill battle for GM to restabilize. I question whether they’ll even make it back into solvency.
07/06, 2:28 PM
posted by:
leftwingagenda
ricky_b, what’s the evidence? why question whether they’ll be solvent again? at the end of bankruptcy all the poisonous assets are tied up with a bow and left behind as the new GM gets to forge ahead with the most profitable divisions…that would seem to be a dramatic streamlining of the company…since chrysler took the point on this kind of bankruptcy, there’s no need for legal slowdowns to set precedents, even…what specific points do you think will hold things up?
07/06, 4:48 PM
posted by:
Borat
Poisonous or “bad” assets are product of very same GM that is now part owned by two country and the labor force that bankrupt it. I wonder what the recipe government has that it plans to turn around disfunctional company? In the era where all other manufacturers are talking about economies of scale smaller company with smaller production does not make sense. Very same economy of scale is not there.
07/09, 8:31 PM
posted by:
GM An American Embarrassment
MY NAME SAYS IT ALL LOL