Judge plans to OK end of old GM
March 4, 2011 http://detnews.com/article/20110304/AUTO01/103040340
Judge plans to OK end of old GM
Most objections rejected as sale of last assets readied
Detroit News Washington Bureau
New York— A federal bankruptcy judge said Thursday he would approve a plan to liquidate the remnants of 102-year-old General Motors Corp. — a milestone in the restructuring of the U.S. auto industry.
“This plan will be confirmed,” said Judge Robert E. Gerber after a day-long hearing — just under 21 months after the company sought bankruptcy protection.
Gerber said he will issue a written opinion in the next few days and may make some small tweaks.
The plan’s confirmation date should be around March 31, clearing the way for the distribution of stock to some creditors early next month and the cancellation of old GM’s 610 million shares of stock.
Creditors have submitted $29.5 billion in verified claims and are to get $5 billion in new GM stock and warrants equal to 15 percent of the company’s stock.
How much money they recover will depend on the performance of the new stock.
Stephen Karotkin, a lawyer for old GM, noted the June 2009 bankruptcy filing led to “GM’s rebirth” and “the continued employment of tens of thousands of people worldwide. We think that’s a testament to the value and flexibility of our bankruptcy system.”
The announced liquidation plan approval “brings to a close, we hope, a very successful administration” of the bankruptcy, Karotkin said.
Earlier in the day, Gerber approved the creation of a $773 million environmental trust to oversee the cleanup and sale of 89 former General Motors properties in 14 states.
He rejected a request from Salina, N.Y., for cleanup funds for sites near a former GM site. He also turned down a request by a group of hedge funds that held bonds from GM Nova Scotia for early distribution of their new GM stock.
The announced approval means old GM — now known as Motors Liquidation Co. — will go out of the business in the next few months.
In addition, the U.S. Attorney’s Office said it is still in talks with old GM over other environmental claims — and that the government may recover additional money to pay for other cleanup.
The plan includes $536 million in direct cleanup money as well as $300 million to cover property taxes, demolition costs, plant security and other expenses.
The plan will help clean the polluted vestiges of Buick City, Pontiac Assembly and Willow Run, among other plants. The program includes $161 million for restoring 47 sites in 14 Michigan communities. Many are along the Interstate 75 corridor — the backbone of Michigan manufacturing — in cities such as Detroit, Flint, Saginaw and Bay City.
The former GM-Toyota Motor Corp. joint venture in Fremont, Calif. — New United Motor Manufacturing Inc. — agreed to withdraw its objection to the liquidation plan.
The U.S. government, which gave GM a $49.5 billion bailout and still owns 33 percent of new GM, urged approval of the plan. “The plan is overwhelmingly beneficial to the nation and to the creditor(s),” said Assistant U.S. Attorney David Jones.
“It honors the commitment that the United States made to fund the proper wind down of the old GM’s non viable assets, following the hugely successful launch of new GM.”
He said a quick resolution is needed “so creditors could get paid” and “taxpayers of the United States can stop bearing the extraordinary and ever growing expense of running a complex unresolved Chapter 11 proceeding.”
The Canadian and Ontario governments gave GM a separate $9.5 billion bailout and they also urged approval of the plan.