By — PBS NewsHour PBS NewsHour Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/business-july-dec09-gmsale_07-06 Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Judge OKs Plan to Sell GM Assets; Appeal Looms Economy Jul 6, 2009 1:18 PM EDT Late Sunday, U.S. Bankruptcy Court Judge Robert Gerber said in a 95-page ruling that GM’s sale was in the best interests of both itself 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,” he wrote in his ruling. But the ruling is likely to be appealed. A Chicago law firm representing people who have sued GM in several car wreck cases filed paperwork Monday saying it would appeal to U.S. District Court in New York. Gerber said the sale was GM’s only option and that completing it would “prevent the death of the patient on the operating table.” He approved the sale just over one month after GM filed for bankruptcy, in the largest U.S. manufacturing bankruptcy in history. Under the deal brokered by the Obama administration, “New GM” will emerge as a more streamlined automaker operating the best parts of the old company, including its Chevrolet and Cadillac brands, with a cheaper workforce, smaller dealer network and much less debt. “Old GM,” which includes less-popular brands and unneeded factories and liabilities, will remain behind in bankruptcy court to be liquidated. “The U.S. Treasury, in making hard decisions about where to spend its money and make New GM as viable as possible, made business decisions that it was entitled to make,” Gerber wrote. Gerber issued a four-day stay of the order approving the sale, which should allow it to close as early as Thursday. Such stays are typical and allow for possible appeals. The sale marks the second big victory for the Obama administration’s auto task force. It helped broker the disposal of Chrysler LLC to a group led by Italy’s Fiat last month. 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. “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,” GM President and CEO Fritz Henderson said in a statement Monday. “Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.” But attorneys for some of GM’s bondholders, unions, consumer groups and individuals with lawsuits against the company argued for its rejection, saying that their needs were being pushed aside in favor of the interests of GM and the government. Lawyers for five “individual accident litigants” filed a notice of appeal with the bankruptcy court Monday that gave no grounds or details. The deadline to appeal is noon Thursday, after which point Gerber’s order takes effect and the sale is free to close. Last month, a group of bondholders and others took their objections to Chrysler’s sale plan all the way to the Supreme Court, delaying the automaker’s exit from bankruptcy protection. Several consumer groups have objected to provisions in the sale that free the new company from liability for consumer claims related to incidents that occurred before GM went into bankruptcy protection. That means that people injured by a defective GM product in connection with an incident that occurred before June 1 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. 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 July 10. The Detroit automaker’s Chapter 11 filing on June 1 was the fourth-largest in U.S. history. By — PBS NewsHour PBS NewsHour
Late Sunday, U.S. Bankruptcy Court Judge Robert Gerber said in a 95-page ruling that GM’s sale was in the best interests of both itself 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,” he wrote in his ruling. But the ruling is likely to be appealed. A Chicago law firm representing people who have sued GM in several car wreck cases filed paperwork Monday saying it would appeal to U.S. District Court in New York. Gerber said the sale was GM’s only option and that completing it would “prevent the death of the patient on the operating table.” He approved the sale just over one month after GM filed for bankruptcy, in the largest U.S. manufacturing bankruptcy in history. Under the deal brokered by the Obama administration, “New GM” will emerge as a more streamlined automaker operating the best parts of the old company, including its Chevrolet and Cadillac brands, with a cheaper workforce, smaller dealer network and much less debt. “Old GM,” which includes less-popular brands and unneeded factories and liabilities, will remain behind in bankruptcy court to be liquidated. “The U.S. Treasury, in making hard decisions about where to spend its money and make New GM as viable as possible, made business decisions that it was entitled to make,” Gerber wrote. Gerber issued a four-day stay of the order approving the sale, which should allow it to close as early as Thursday. Such stays are typical and allow for possible appeals. The sale marks the second big victory for the Obama administration’s auto task force. It helped broker the disposal of Chrysler LLC to a group led by Italy’s Fiat last month. 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. “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,” GM President and CEO Fritz Henderson said in a statement Monday. “Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.” But attorneys for some of GM’s bondholders, unions, consumer groups and individuals with lawsuits against the company argued for its rejection, saying that their needs were being pushed aside in favor of the interests of GM and the government. Lawyers for five “individual accident litigants” filed a notice of appeal with the bankruptcy court Monday that gave no grounds or details. The deadline to appeal is noon Thursday, after which point Gerber’s order takes effect and the sale is free to close. Last month, a group of bondholders and others took their objections to Chrysler’s sale plan all the way to the Supreme Court, delaying the automaker’s exit from bankruptcy protection. Several consumer groups have objected to provisions in the sale that free the new company from liability for consumer claims related to incidents that occurred before GM went into bankruptcy protection. That means that people injured by a defective GM product in connection with an incident that occurred before June 1 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. 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 July 10. The Detroit automaker’s Chapter 11 filing on June 1 was the fourth-largest in U.S. history.