Judge OKs plan to sell Chevy, other GM assets to US-backed firm
Ruling clears path for restructuring
NEW YORK - A federal judge approved a plan by General Motors late last night to sell its best assets to a new, government-backed company, a crucial step for the automaker to restructure and complete its trip through bankruptcy court.
The decision by the judge, Robert E. Gerber of US Bankruptcy Court in Manhattan, came after three days of hearings to address the 850 objections to the restructuring plan and after he had received a revised sale order from GM's lawyers.
In his 95-page opinion, Gerber wrote that he agreed with GM's main contention: that the asset sale was needed to preserve its business in the face of steep losses and government financing that is scheduled to run out by the end of the week.
"Bankruptcy courts have the power to authorize sales of assets at a time when there still is value to preserve - to prevent the death of the patient on the operating table," Gerber wrote.
With the approval of the restructuring plan, GM and the government are seeking to close the sale by today or tomorrow, according to people briefed on the matter. The government, which is financing the reorganization, had given GM until Friday to win approval for the sale or risk losing its bankruptcy financing.
Harry J. Wilson, a member of the Obama administration's auto task force, testified on Wednesday that the administration did not intend to extend the loan by even one day beyond the deadline.
Gerber's approval marks another victory for the Obama administration, which has sought an enormous restructuring of the American auto industry in an extraordinarily short time span. Last month, a new Chrysler emerged from bankruptcy in just 42 days despite a challenge by three Indiana state funds that went as high as the Supreme Court.
If completed by Friday, GM would be near the end of an unusually quick trip through the bankruptcy courts, turning itself into a smaller company with fewer brands and a new focus on fuel-efficient cars.
Under the terms of the revised deal, GM would sell its most desirable assets, including the Chevrolet and Cadillac brands, to a new company owned largely by the US and Canadian governments and a healthcare trust for the United Automobile Workers union. The Obama administration anticipates taking the company public next year. It will still bear the General Motors name.
Old GM will stay in bankruptcy. The Obama administration has agreed to provide $1.2 billion while the company winds down its estate and settles claims.
Along the way, the company has shed 21,000 union workers and closed from 12 to 20 factories.
In addition, 40 percent of GM's 6,000 dealers will close. 