GM set to exit bankruptcy, possibly later today

ERJ staff report (AN)

Chrissie Thompson, Automotive News

Detroit. Michigan -- The best assets of General Motors were set to emerge in the next dew days from a 38-day bankruptcy as General Motors Co., a new entity majority-owned by the US government.

GM could complete the asset sale as early as today (Friday), spokeswoman Julie Gibson said.

"We're working on that now, and we're going to try to get that done as soon as is humanly possible," she said.

GM scheduled a 9 a.m. EDT press conference Friday, where CEO Fritz Henderson will "update the media on GM business activities." Edward Whitacre, the former CEO of AT&T Inc. who was tapped to chair the new GM's board, will join Henderson, the company said in a statement.

Judge Lewis Kaplan, of the US District Court in New York, today denied a request by a committee of asbestos personal-injury claimants to delay the asset sale pending its appeal. Kaplan said in court documents a stay of the sale would likely lead to GM's liquidation.

On Tuesday, Judge Robert Gerber of the US Bankruptcy Court in Manhattan had denied a request to fast-track that appeal and one by a group of accident litigants. The two groups had motioned to take the case before the 2nd US Circuit Court of Appeals in New York.

Asbestos claimants

Kaplan said the court would hear arguments regarding the asbestos claimants' appeal during the week of July 20, although he said the appeal may be mooted by the actual sale.

In addition, four plaintiffs in a case involving a death from the rollover of a Chevrolet Malibu today filed documents indicating they intended to appeal the asset sale to the district court. Neither the lawyer who filed that appeal, Michael Kimm, or lawyers for GM were available for comment.

The old General Motors Corp. had turned 100 on Sept. 16, 2008, on its way to posting cumulative losses over four years of $82 billion.

While freed of most of its debt and flush with $50 billion in US funding, the new GM will still fight a global recession and US light-vehicle sales stuck at their lowest levels since the early 1980s.

Bankruptcy Court's Gerber had approved the asset sale on Sunday. A four-day stay he had placed on the sale lifted at noon yesterday (Thursday).

The US government had said it could walk away from funding the automaker if a deal was not approved by Friday.

US role

Under the sale, the US Treasury will own 60.8 percent of the new GM's common stock, and the Canadian government will own 11.7 percent. A UAW-run health care trust will own 17.5 percent, and GM bondholders will have 10 percent ownership.

In his decision to allow the sale, Gerber said it would "prevent the death of the patient on the operating table."

As part of its restructuring, GM is keeping the Buick, GMC, Cadillac and Chevrolet brands. It plans to phase out Pontiac next year and is selling the Hummer, Saab and Saturn brands in moves that would eliminate 500 dealerships.

The automaker is also terminating the US franchise agreements of about 1,380 stores by October 2010, which will leave it with about 4,100. GM has said it hopes to reduce that number to 3,600 by the end of 2010, with some dealerships closing through attrition.

Reuters and Jamie LaReau contributed to this report.

From (A Crain publication)