The Herald, Sharon, Pa.

Business

July 9, 2009

New GM cleared to exit bankruptcy in record time

DETROIT — The path is now clear for General Motors Corp. to leave bankruptcy protection in record time as a leaner company that is better equipped to compete in a brutal global auto market.

On Thursday, a judge’s order allowing GM to sell most of its assets to a new company went into effect, despite a last-minute appeal by plaintiffs in a product liability case.

GM spokeswoman Julie Gibson said U.S. Bankruptcy Judge Robert Gerber’s order became effective at 12 p.m. EDT. GM lawyers are working on paperwork to close the sale as quickly as possible, after which GM would leave bankruptcy protection.

GM CEO Fritz Henderson will hold a news conference in Detroit Friday morning to explain executive cuts, management changes and the company’s plan to make money by emphasizing quality and fuel economy. He will be joined by Edward Whitacre Jr., who will lead the board of GM.

Once the world’s largest and most powerful automaker, the “new GM” will become government-owned, but leaner and greener, cleansed of debts and burdensome contracts that nearly dragged it into liquidation. But the new company faces tough international competition and the worst auto sales market in more than 25 years.

John Pottow, a University of Michigan Law School professor who specializes in bankruptcy, said opponents of the sale had little legal recourse to block it because their issues were shot down by higher courts in Chrysler’s bankruptcy case.

“It’s done,” Pottow said. “I knew they were dead as soon as the Chrysler case was decided.”

He expects GM to close the deal and emerge from bankruptcy on Thursday in 39 days, a record for a company its size, he said.

GM spokesman Tom Wilkinson said he could not give a time frame for when the sale will close.

After clearing bankruptcy court, the new GM will focus only on four core brands, Chevrolet, Cadillac, Buick and GMC. The company is in the process of selling Saturn, Saab, Hummer and its Adam Opel GmbH unit in Europe, and it will discontinue Pontiac by the end of the year.

GM would not have been able to clear bankruptcy court at such a high speed without help from its crosstown rival Chrysler Group LLC, which exited bankruptcy on June 10 after 42 days.

Pottow said Chrysler’s case set favorable legal precedents in previously uncharted territory of bankruptcy law.

The U.S. government, which will wind up loaning GM up to $50 billion to save its roughly 88,000 U.S. jobs, also played a significant role through the Treasury Department’s auto task force, Pottow said.

“It’s amazing what you can do when you have a government task force convened to help your company,” he said.

The government provided bankruptcy financing, and the task force served the role of management consultant, telling GM that its early restructuring plans were too rosy and demanding further cuts, he said.

The parts of the company not moving over to the new company will become part of “old GM,” a collection of assets and liabilities that will be liquidated over the next few years and sold off to pay the company’s various creditors including people with pending lawsuits.

The assets range from the expected things, such as closed plants and other facilities, to more quirky items including a golf course in New Jersey and a church in Indiana.

The government has pledged $1.18 billion to help fund the wind down.

Text Only
Business
  • Authority OKs change order for temporary work

    Hermitage Municipal Authority begrudgingly approved paying more than $7,000 to move electric lines that will soon be abandoned.

    February 2, 2012

  • indianapolis.jpg Indy draws on super effort to overcome skeptics

    Leaders of Indiana's capital city spent years gussying up their downtown to prepare for Super Bowl XLVI -- by building big sports and convention venues and luring nice hotels, popular restaurants and a four-story shopping mall.

    January 31, 2012 1 Photo

  • Despite new construction, building slumps in city

    Although it’s hard to compare dollar values from today and even a few years ago, it’s safe to say there was not much new development in Hermitage in 2011.

    January 31, 2012

  • Distinguished service award going to Hudson

    On Feb. 2, Thiel College will recognize 10 faculty and staff members and John M. Hudson at the college’s annual Founders’ Day convocation in the Lutheran Heritage Room of the Howard Miller Student Center.

    January 27, 2012

  • Contractors, workers eye CHOICE housing jobs

    There are no guarantees that Shenango Valley residents will be among the workers who build a 34-unit apartment complex and 10 homes in Farrell, but an open house Wednesday gave them a chance to lay the groundwork to be considered.

    January 26, 2012

  • FNB: 2011 earnings up 16%

    FNB Corp. reported its fourth quarter earnings edge down slightly from a year ago but the results were due to a one-time credit a year ago of nearly $7 million. For all of 2011 earnings for the company were up 16 percent from 2010.

    January 24, 2012

  • Retiring Reichard feted for service to Penn-Northwest

    For more than a quarter of a century, Larry Reichard was the voice and spirit of Penn-Northwest Development Corp.

    January 20, 2012

  • GE receives order for 43 more locomotives

    GE Transportation on Tuesday said it signed a deal to sell 43 locomotives to Transnet SOC Ltd., South Africa, which will benefit its Grove City plant.

    January 11, 2012

  • City planners prefer new facade for Chipotle

    A month after calling the proposed Chipotle Mexican Grill building “ugly,” Hermitage Planning Commission Chairman Charles E. Rogers was much more reserved in his comments about a revised facade.

    January 10, 2012

  • Kelly raps role of feds in Volt fires

    U.S. Rep. Mike Kelly complimented General Motors Co. for telling Volt owners to return the car to dealers for repairs, but continued his call for repealing the $7,500 tax credit for the plug-in electric-drive vehicles.

    January 9, 2012