NEW YORK - The former General Motors Corp. won approval of a settlement with five unions over retiree health care benefits, with the unions agreeing to share a $1 billion unsecured claim against the automaker’s bankruptcy estate.
In exchange, the labor groups, including the International Union of Electrical Workers and United Steelworkers, will drop their appeal of the sale of GM’s most profitable businesses to a US Treasury-led group in July.
US Bankruptcy Judge Robert Gerber approved the deal at a hearing yesterday in New York. The agreement resolves health care and pension issues for about 30,000 retirees, according to a court filing.
The unions “got as good a deal as could be hoped for under the circumstances,’’ Gerber said.
Old GM, now known as Motors Liquidation Co., and the current General Motors Co. also agreed to cover some retiree health care costs, pension costs, and life insurance benefits, according to court papers. Three other unions declined to join the settlement, GM lawyer Stephen Karotkin said at the hearing.
GM plans to pay the administrative costs of its Chapter 11 case with a $1.18 billion “wind down’’ loan from the government and proceeds from selling its remaining assets. The company predicted the only assets available to distribute to creditors, such as the unions, will be 50 million shares of the new GM and warrants to buy more shares, according to court documents.
