GM plans to exit bankruptcy this week

• Source: xinhua
• [16:28 July 07 2009]
• Comments

The largest US automaker General Motors Corp., which has won approval of sale of its assets to a new entity backed by the US federal government, plans to exit bankruptcy this week, the Detroit News reported Monday.

GM CEO Fritz Henderson was quoted as saying that the automaker planned to close on the sale after the appeal process is exhausted. US Bankruptcy Judge Robert Gerber in clearing the way for the sale of GM's good assets gave opponents until Thursday at noon to appeal and win an additional delay from a higher court.

"We expect the sale to close immediately after the appeal process is exhausted later this week, and for the new GM to be operational and fully competitive, with an exciting line of new products, a smaller and more focused brand portfolio, and a clear mission to put the customer first in everything we do," Henderson said.

The new GM will be known as General Motors Co. and is backed with 50 billion dollars in US government loans.

The Treasury Department will hold 60.8 percent stake in GM, which will be privately held until at least next year, while the Canadian government will hold 11.7 percent, and a United Auto Workers (AUW) health care trust fund will hold 17.5 percent. Unsecured creditors will hold 10 percent of GM.

"Our focus in recent weeks has been on creating a new company from the strongest parts of the old GM, and on doing it with transparency and speed. This has been an especially challenging period, and we've had to make very difficult decisions to address some of the issues that have plagued our business for decades," Henderson said.

The Obama administration pushed for court approval of GM's asset sale by Friday, warning that it wouldn't offer the Detroit automaker any additional aid after that deadline. The administration has already given GM about 27 billion dollars and has committed to total support of just over 50 billion dollars.

After the new GM emerges from bankruptcy protection, the old GM is expected to spend two or three years in bankruptcy while the bad assets are sold off or shut down.