A federal judge approved the sale of General Motors Corp.'s assets to a new government-run company, removing a key hurdle to the auto maker's plan to exit bankruptcy. Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York issued an 87-page ruling late Sunday allowing the sale to go forward. He rejected pleas from dissident bondholders and product-liability claimants who objected to GM's plans. The judge said the only alternative to GM's plans would be 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. In the event of a liquidation, creditors now trying to increase their incremental recoveries would get nothing." The ruling paves the way for GM's government-brokered restructuring, in which the auto maker will move its "good" assets -- including automotive brands Chevrolet, Cadillac, Buick and GMC -- to a new company owned by the U.S. Treasury. The sale approval clears the way for GM to potentially exit bankruptcy in less than two months. In the deal, the U.S. government will take about a 61% stake in the new GM after loaning the auto maker more than $50 billion. The Canadian government, which also aided GM, will hold about 12%. A retiree health-care trust for the United Auto Workers union will get a 17.5% stake, while bondholders and other unsecured creditors will get a 10% stake. The government hopes to take the new GM public next year. If the sale is consummated, it would mark a major victory for the Obama administration, which undertook to remake the U.S. auto industry on the heels of the financial crisis. Chrysler Group LLC exited bankruptcy in just over 40 days in a deal with Italian auto maker Fiat SpA. GM now appears poised to beat the government's initial projections of up to three months in bankruptcy court. GM and the government hope to close the deal quickly, but could face appeals. Steve Jakubowski, a lawyer for product-liability claimants, said he would appeal the ruling because it didn't require the "new GM" to be responsible for pending lawsuits from car-accident victims that arose before the auto maker's bankruptcy. GM, under presser from state attorneys general, revised its bankruptcy plan recently to require the new GM to take on claims from future car-accident victims. Chrysler's bankruptcy sale dragged out for a few days after a group of Indiana pension funds appealed. Chrysler emerged in its deal with Fiat after the Supreme Court declined to hear the pension funds' case. "This issue is too important, too unsettled and too many people's lives hang in the balance for me not to pursue this appeal through to the end," said Mr. Jakubowski, the lawyer representing some of GM's product-liability claimants. In his ruling, Judge Gerber said the question of whether the new GM should be subject to so-called "successor liability" represented "the only truly debatable issues in this case." But the judge said he was bound by legal precedent – including Chrysler's recent sale to Fiat SpA free of such liabilities – in not making GM go further than it already had on product-liability claims. Judge Gerber's ruling came after three days of hearings on the deal and 850 objections. Dissident bondholders and car-accident victims with product-liability claims, among others, argued against the sale, saying it trampled their rights. Bondholders said GM's sale proposal ducked the bankruptcy code's requirement for companies to submit traditional reorganization plans subject to creditors' approval. GM said a speedy sale was necessary to get GM in an out of court quickly, or risk liquidation. The government had set a deadline of July 10 for the sale to be approved. Harry Wilson, a member of President Barack Obama's auto task force, testified in bankruptcy court last week that the government wouldn't finance GM beyond that date. Lawyers for bondholders argued the government was bluffing. Judge Gerber rejected the bondholders' argument, saying it was "wholly unrealistic" to attempt to make GM reorganize through a traditional Chapter 11 plan subject to creditors' approval. "In fact, the notion that a reorganization plan confirmation could be completed in 90 days in a case of this size and complexity is ludicrous, especially when one is already on notice of areas of likely controversy," the judge wrote. The new GM would retain many of the bankrupt auto maker's key executives, including current CEO Frederick "Fritz" Henderson. The "old GM" plans to wind down in bankruptcy court. Al Koch, a managing director at Southfield-Mich.-based turnaround firm AlixPartners, will lead the liquidation. The government is providing $1.175 billion for that effort, up from $950 million. Mr. Koch testified last week that the wind-down could take at least two or three years. Write to Mike Spector at mike.spector@wsj.comGM Asset Sale Gets Judge's Nod
By MIKE SPECTOR
http://online.wsj.com/article/SB124685350559099233.html
FIAT is actually sending 4 versions of the 500 to The States- great news, the US market sure could use the variety- I drove one of these things in Greece… nice car, and a lot of fun- and I'm 6'2"
Viva FIAT!
http://fiat2america.blogspot.com
Posted by: FIAT 2 America | July 06, 2009 at 06:26 PM