GM estate has liquidation pact with U.S., creditors

December 2, 2010

GM estate has liquidation pact with U.S., creditors

Bloomberg News

General Motors Corp.’s unwanted businesses in bankruptcy reached an agreement with creditors and the U.S. Treasury that will allow it to approve a final plan to liquidate.

Motors Liquidation Co. lawyer Stephen Karotkin told U.S. Bankruptcy Judge Robert Gerber in Manhattan today that the final wording of the agreement would be sent to the parties for review. A hearing was set for Dec. 7 to resolve any remaining issues. Terms will include budgeting $4 million in wind-down costs to fund a trial over asbestos liabilities, and $9 million to fund a trust for unsecured creditors.

“An agreement reached along with U.S. Treasury, the creditors committee and the debtors with regards to all outstanding issues that were preventing approval of the disclosure statement,” Karotkin told Gerber.

On Oct. 21, Gerber gave his conditional approval to the disclosure statement, which describes the terms of liquidation and allows creditors to vote on it. At that hearing, he turned aside objections by creditors who claimed they lacked enough information about issues such as the size of asbestos and personal-injury claims.

A creditors’ lawyer, Thomas Moers Mayer, told Gerber on Nov. 22 that creditors and the U.S. Treasury were still disagreeing on several other issues in the largest manufacturing reorganization in history.

When GM filed for bankruptcy in June 2009, it sold its more valuable assets to a newly formed company that has since gone public. Unwanted properties were left under bankruptcy protection. A plan for Old GM first filed in August proposed giving stock and warrants in new GM to satisfy the claims of unsecured creditors.

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