Judge rejects challenge to GM restructuring plans
Tuesday 07 July 2009
An American bankruptcy court judge has approved the government-brokered restructuring of General Motors, less than a month after a financial restructuring of rival Chrysler was also rubber-stamped by the US legal system.
With bondholders in the automakers still complaining that the administration had ridden roughshod over established bankruptcy law to push through its rescue of the US car industry, Judge Robert Gerber said that the proposed sale of GM's assets was the only option to "prevent the death of the patient on the operating table".
Under the plan, GM's best assets are being sold to a "new GM" that will be majority-owned by the US taxpayer. A union-run trust will own 17.5 per cent of the company, to fund healthcare benefits for employees. Investors holding $27bn of GM bonds will get just 10 per cent, and no cash.
"The US Treasury, in making hard decisions about where to spend its money and make 'new GM' as viable as possible, made business decisions that it was entitled to make," Judge Gerber wrote, in a 95-page judgment released late on Sunday.
"As nobody can seriously dispute, the only alternative to an immediate sale is 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," he went on. "In the event of a liquidation, creditors now trying to increase their incremental recoveries would get nothing."
A group calling itself the Unofficial Committee of Family & Dissident GM Bondholders had argued that the government had been overbearing in its negotiations with bondholders. Other opposition groups included some of GM's dealerships, 40 per cent of which will be closed under the plan, and the victims of accidents involving GM cars. Accident litigants filed an appeal against Judge Gerber's ruling yesterday. The sale has been stayed four days to allow for higher courts to examine the sale.
The sale of Chrysler to Italy's Fiat was agreed last month, after bondholders took their opposition all the way to the US Supreme Court.
- 1 If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
- 2 Moscow voted the world's unfriendliest city
- 3 Idris Elba is ‘too street’ to play 007, says James Bond author
- 4 Pansexual: What is it - and when did the term gain popularity?
- 5 I'm pansexual – here are the five biggest misconceptions about my sexuality
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
iJobs Money & Business
£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...
£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...
£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...
£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...