U.S. Bankruptcy Court Judge Robert Gerber approved the sale of General Motors’ in a move that would allow the company to avoid liquidation and to sell its most profitable assets to the ‘New GM.’ Gerber said that the move would “prevent the death of the patient on the operating table.”
Gerber has issued a four-day stay of the order approving the sale where appeals may be possible. He rejected claims from a group of bondholders that GM could have restructured itself under a more traditional Chapter 11 reorganization plan.
Under the ‘New GM’ the company will operate that best parts of the ‘Old GM,’ including Chevrolet, Cadillac, Buick and GMC. It will have less debt, a cheaper workforce and a smaller dealer network. The rest of the ‘Old GM’ will be liquidated.
“GM cannot survive with its continuing losses … and without the governmental funding that will expire in a matter of days,” Gerber wrote in the 95-page opinion in response to a statement made by CEO Fritz Henderson earlier this month.
“As nobody can seriously dispute, the only alternative to an immediate sale is liquidation – a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates,” Gerber said.
Gerber also rejected arguments that the U.S. government had been overbearing in its negotiations to restructure the GM since it had loaned it billions to keep the company alive.
– By: Omar Rana