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General Motors CEO Fritz
Henderson speaks at a press conference in New York, Monday,
June 1, 2009. General Motors filed for Chapter 11 bankruptcy
protection Monday as part of the Obama administration's plan
to shrink the automaker to a sustainable size and give a
majority ownership stake to the federal government. (AP
Photo/Seth Wenig) |
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GM
hoping
for
speedy
sale and
exit
from
Chapter
11
By BREE
FOWLER
AP Auto
Writer
General
Motors
hopes to
follow
the lead
of
fellow
U.S.
automaker
Chrysler
by
transforming
its most
profitable
assets
into a
new
company
in just
30 days
and
emerging
from
bankruptcy
protection
soon
after.
But
Detroit-based
General
Motors
Corp. is
much
larger
and
complex
than its
Auburn
Hills,
Mich.-based
rival
and
isn't up
against
Chrysler
LLC's
tight
June 15
deadline
with
Fiat.
Sharon
Lindstrom,
managing
director
at
business
consulting
firm
Protiviti,
said the
companies
pose
different
challenges.
But as
with
Chrysler,
she
notes
that the
Treasury
Department
made
sure
many of
GM's
moving
parts
were in
order
ahead of
time so
a quick
bankruptcy
reorganization
might be
possible.
"They
had a
lot of
their
ducks in
a row
because
the
terms of
the
government
financing
forced
them to
get all
the
parties
to the
table in
a very,
very
short
period
of
time,"
Lindstrom
said.
GM
nailed
down
deals
with its
union
and a
majority
of its
bondholders
and
arranged
to sell
off most
of its
Opel
operations
in
Europe
in order
to
appear
in court
Monday
with a
near-complete
plan to
quickly
emerge
with a
chance
to
become
profitable.
The
government
has said
it
expects
GM to
come out
of
bankruptcy
protection
within
60 to 90
days. By
comparison,
the
judge
overseeing
Chrysler's
case
approved
the sale
of its
assets
to a
group
led by
Italy's
Fiat
Group
SpA in
just
over a
month.
Some
industry
observers
think
Chrysler
could
emerge
as early
as this
week.
During
Monday's
hearing
GM
Attorney
Harvey
Miller
stressed
the
magnitude
of the
case and
the
importance
of
moving
GM
through
court
oversight
as fast
as
possible.
He noted
that the
automaker
only has
about $2
billion
in cash
left.
"If
there's
going to
be a
recovery
of
value,
it's
absolutely
crucial
that a
sale
take
place as
soon as
possible,"
Miller
said in
his
opening
statement.
The
automaker
wants to
sell the
bulk of
its
assets
to a new
company
in which
the U.S.
government
will
take a
60
percent
ownership
stake.
The
Canadian
government
would
take
12.5
percent
of the
"New
GM,"
with the
United
Auto
Workers
union
getting
17.5
percent
and
unsecured
bondholders
receiving
10
percent.
Existing
GM
shareholders
are
expected
to be
wiped
out.
Attorneys
for GM
stakeholders
packed
the
stuffy
courtroom
well
ahead of
the
automaker's
first-day
Chapter
11
hearing.
U.S.
Judge
Robert
Gerber
moved
swiftly
through
the
agenda's
more
than 25
mostly
procedural
motions.
Gerber
set GM's
sale
hearing
for June
30,
putting
it on a
path
similar
to that
of
Chrysler.
Objections
are due
on June
19, with
any
competing
bids
required
to be
submitted
by June
22.
Gerber
also
gave GM
immediate
access
to $15
billion
in
government
financing
to get
it
through
the next
few
weeks,
and
interim
approval
for use
of a
total
$33.3
billion
in
financing,
with
final
approval
slated
to be
ruled on
June 25.
The
funds
are
contingent
on GM's
sale
being
approved
by July
10.
Gerber
also
approved
motions
allowing
the
company
to pay
certain
prebankruptcy
wages,
along
with
supplier
and
shipping
costs.
The
sheer
size of
GM makes
it a
more
complicated
case
than
Chrysler.
GM made
twice as
many
vehicles
as
Chrysler's
1.5
million
last
year and
employs
235,000
people
compared
with
Chrysler's
54,000.
GM also
has
plants
and
operations
in many
more
countries,
meaning
it will
likely
have to
strike
separate
deals to
navigate
the
bankruptcy
laws of
those
places.
The
company
is
moving
forward
with
just
four
core
brands —
Chevrolet,
Cadillac,
Buick
and GMC.
GM China
Group
President
Kevin
Wale
said
late
Monday
an
announcement
on the
sale of
the
iconic
Hummer
brand is
expected
"imminently."
Plans
for
Saturn
are
expected
within
weeks.
GM Chief
Executive
Fritz
Henderson
said GM
has
learned
a few
things
by
watching
Chrysler's
case.
"Certainly
the
court
showed
that it
can
address
363
(sale)
transactions
in an
expeditious
fashion,"
Henderson
said at
a press
conference
Monday.
"Particularly
in our
case
with
what
will be
a very
large
363
transaction."
GM's
Monday
filing
for
Chapter
11
bankruptcy
protection
is the
largest
ever for
an
industrial
company.
GM,
which
said it
has
$172.81
billion
in debt
and
$82.29
billion
in
assets,
had
received
about
$20
billion
in
low-interest
loans
before
entering
bankruptcy
protection.
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