Single appeal filed in sale of GM’s assets
Deal still likely to go through
NEW YORK -
Steven Jakubowski, a lawyer for creditors appealing Sunday’s ruling, said he won’t seek a stay blocking the sale while the appeal is being considered. His clients are people with accident-related claims involving GM vehicles. Jakubowski said the new company should take responsibility for claims that predate the sale.
US Bankruptcy Judge Robert Gerber, who approved the sale, said it was the only option available to the bankrupt Detroit-based automaker, which filed for court protection June 1. The appeal should go directly to a federal appeals court, Jakubowski said.
“This is a matter of public importance,’’ Jakubowski, a lawyer with the Coleman Law Firm in Chicago, said in an interview on why he appealed yesterday.
Gerber stayed his order through noon Thursday to give opponents a chance to appeal. GM had asked that the order to be made effective immediately.
The Unofficial Committee of Family & Dissident GM Bondholders said in an e-mailed statement from their lawyer Michael Richman that it doesn’t plan to appeal the sale due to the potential cost.
“The committee members today simply lack the resources needed to mount an effective appeals process on the accelerated basis that would be required here,’’ chairman Hal John said. The group of three investors said they were representing as many as 2,000 others who own as much as $500 million of GM debt. Richman of Patton Boggs LLP had argued Gerber should call the Obama administration’s bluff that it would let GM liquidate if the sale weren’t approved. He wanted Gerber to force the automaker to file a complete reorganization plan on which creditors could vote.
GM lawyer Stephen Karotkin, of Weil Gotshal & Manges LLP, said barring a further stay, the sale would “close promptly,’’ a comment repeated by GM chief executive Fritz Henderson on a company blog.
The company will have a “leaner and meaner’’ management after the sale closes, said Steven Rattner, the Treasury’s chief auto adviser. The new GM will be a smaller company than it was and somewhat less global so it would be natural for the management structure to change, Rattner said yesterday during a conference call. GM has said it will fire about 35 percent of its top 1,300 executives, leaving it with 845.
Gerber’s decision largely followed the ruling of another bankruptcy judge, Arthur Gonzalez, who approved the sale last month of most of the assets of GM’s smaller rival, Chrysler LLC, to an entity to be run by
Gerber decided the GM sale, like Chrysler’s, could be done “free and clear of claims,’’ meaning the reorganized company needn’t take on product-liability claims from before the transaction is completed.
Barry Bressler, a lawyer representing more than 300 tort claimants, said Gerber’s ruling “was not unexpected.’’ He declined to say whether he would appeal.
Bressler, who also represented tort claimants in the Chrysler case, asked the Supreme Court to review the liability issues. The court hasn’t decided whether to hear that case.
Jakubowski said it was possible the court might consolidate his case with Bressler’s and decide both simultaneously.
The issue needs to be addressed because so many companies are selling their assets through quick “363 sales’’ in bankruptcy, cutting off existing liability, Jakubowski said. He and other objectors argued at a three-day hearing before Gerber that GM should file a traditional Chapter 11 reorganization plan and seek creditors’ votes for an asset-sale plan, a process that might take months or longer.
GM and the Treasury argued the company wouldn’t survive a traditional Chapter 11 case. The government said before the ruling that it would pull its $33 billion in financing if Gerber didn’t approve the sale by Friday.
