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New GM Emerges After 40 Days in Bankruptcy Court

Posted July. 11, 2009 09:37,   


General Motors is set to launch a new company in emerging from bankruptcy protection in 40 days, the Wall Street Journal said yesterday.

The U.S. auto giant began selling its assets Thursday to the “new" GM yesterday.

U.S. Bankruptcy Court Judge Robert Gerber Sunday had allowed the company to sell its best assets to the new GM, whose majority shareholder is the U.S. government, and gave related parties four days to appeal. With the four-day grace period ending, the company began the sale of its assets.

Upon finishing related paperwork for the sale, the auto giant will graduate from bankruptcy protection and emerge as a leaner and more efficient automaker. Bloomberg quoted a U.S. Treasury Department official as saying the asset sale will be completed Friday.

If the court-approved sale is completed, GM will exit bankruptcy protection in a record 40 days after filing for Chapter 11 June 1. The U.S. government originally expected the company to graduate in 60 to 90 days.

Such a quick exit is attributed to the precedent set by Chrysler, in which the bankruptcy court promptly approved its asset sale despite opposition by certain bondholders and support from the U.S. government, according to experts.

Chrysler filed for bankruptcy protection April 30 and sold its major assets to a new Chrysler owned largely by Fiat, emerging from bankruptcy in 42 days.

The new GM will focus on four brands such as Chevrolet, Cadillac, Buick and GMC. Before entering court protection, GM had eight brands.

The U.S. government owns 60.8 percent of the company, the Canadian government 11.7 percent, a United Auto Workers’ retirement health care trust 17.5 percent, and creditors 10 percent.

The new GM will enhance its competitiveness by focusing on small and high fuel efficiency cars.

For the company to reemerge, experts said the U.S. auto market, which was weakened due to the economic crisis, should be revived and GM must produce cars that appeal to consumers. Yet the road ahead will not be smooth.

The remaining assets after the sale will be either liquidated or sold over several years.