Judge approves GM sale plan

STAFF/WIRE REPORT

NEW YORK — A bankruptcy judge has ruled that General Motors Corp. can sell the bulk of its assets to a new company, potentially clearing the way for the automaker to quickly emerge from bankruptcy protection.

U.S. Judge Robert Gerber said in his 95-page ruling late Sunday that the sale was in the best interests of both GM and its creditors, whom he said would otherwise get nothing.

“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,” Judge Gerber wrote in his ruling.

Jim Graham, president of United Auto Workers Local 1112 in Lords-town, predicted that “we’re going to get back in the groove again.”

He said he expects the new GM to advertise its Chevrolet, Cadillac, Buick and GMC brands heavily.

“They will be showing people that we’re the same company. We’ve learned our lessons. We’ve made mistakes in the past and corrected those mistakes. We can compete with any car company,” he said.

Dave Green, president of UAW Local 1714 in Lordstown, said GM will be “leaner and meaner” after narrowing its brands and closing plants.

It still appears that time is needed before the economy recovers and car sales rebound, however. But he thinks the future is bright for the Lordstown complex because of a new small car that will be launched in April.

“We’re anxiously awaiting the new Chevrolet Cruze. Its seems like an awesome car. We’re going to sell a lot of them,” he said.

An appeal of the judge’s ruling is expected, however. A Chicago law firm representing people who have sued GM in several auto-accident cases filed paperwork Monday saying it would appeal to U.S. District Court in New York. The deadline to appeal is noon Thursday, after which Judge Gerber’s order takes effect and the sale is free to close.

Attorneys for some of GM’s bondholders, unions, consumer groups and individuals with lawsuits against the company have said their needs have been pushed aside in favor of the interests of GM and the government.

GM’s government-backed plan for a quick exit from Chapter 11 hinges on the sale, which will allow the automaker to leave behind many of its costs and liabilities. The Treasury Department has vowed to cut off funding to GM if the sale doesn’t go through by Friday.

Steve Rattner, a top aide to Treasury Secretary Timothy Geithner and the head of the Obama administration’s auto task force, said the government was “confident that his decision will stand, and the sale of GM’s assets to new GM will proceed expeditiously.”

The ruling comes after a three-day hearing that wrapped up Thursday, during which GM and government officials urged a quick approval of the sale, saying it was needed to keep the automaker from selling itself off piece by piece.

Last month, a group of bondholders and others took their objections to Chrysler LLC’s sale to Fiat Group SpA all the way to the Supreme Court, which declined to rule on them.

Still, the proceedings delayed the Auburn Hills, Mich.-based automaker’s exit from bankruptcy protection.

Consumer groups have cautioned that people injured by a defective GM product before June 1, when the automaker filed for bankruptcy, would have to seek compensation from the “old GM,” the collection of assets leftover from the sale, where they would be less likely to receive compensation.

The “old GM,” which will be known as Motors Liquidation Co., will include a smattering of properties, several of which are facilities already slated to be closed.

They will be sold to the highest bidder under court supervision.

A summary of what brands General Motors is shedding:

Slated to go: Pontiac, Hummer, Saab and Saturn.

How: GM said it would stop making Pontiac brand cars. GM is selling Hummer, Saab and its Saturn dealer network.

Pontiac: Production is scheduled to wind down by the end of the year as the company discontinues the brand.

Saturn: Auto-racing magnate Roger Penske has signed a memorandum of understanding that would give his dealership chain, Penske Automotive Group, control of Saturn’s 350 dealerships.

Saab: GM has a memorandum of understanding to sell Saab to Koenigsegg Automotive AB, a Swedish custom sports-car maker. Saab is in bankruptcy protection in Sweden.

Hummer: GM has a tentative agreement to sell its Hummer line to Sichuan Tengzhong Heavy Industrial Machinery of China, but the deal may fall apart. Chinese regulators may block Tengzhong’s bid to buy the vehicle line because the maker of construction machinery may lack the expertise to run Hummer.

Source: GM