DETROIT, July 9, 2009
GM Gets Green Light to Exit Bankruptcy
Judge OK's Sale of Automaker's Assets; "New GM" will be Government-owned but Leaner and Greener
-
Play CBS Video Video GM To Exit Bankruptcy U.S. automaker General Motors is emerging from bankruptcy as a leaner company after five weeks of reorganizing. CBS News business correspondent Anthony Mason reports.
-
(AP Photo/Paul Sancya)
-
Timeline General Motors A look at major dates in the history of the now-troubled auto company
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 Friday morning to explain executive cuts, management changes and the company's plan to make money by emphasizing quality and fuel economy.
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.
The new GM reportedly is considering changing its logo background from blue to green to emphasize its commitment to smaller, more fuel-efficient cars, reports CBS News correspondent Anthony Mason.
The United States Treasury will be the company's biggest stockholder; the American taxpayer will own more than 60 percent of the new GM, Mason reports.
And the Obama administration has picked a new management team: Henderson stays on as GM's interim CEO; former AT&T chairman Ed Whitacre will become GM's chairman; and design guru Bob Lutz, due to retire, has been asked to stay on. But the government wants new blood throughout the company, reports Mason.
"How that organization unfolds is really going to be the demonstration as to whether or not there'll be a new GM or it'll just be a smaller same old GM," says Jeremy Anwyl of Edmunds.com.
What about warranties?
GM will honor warranties for vehicles sold before and during bankruptcy as well as lemon law claims, reports Mason. It will also service any brands, like Pontiac, that may cease production.
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.
© MMIX, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
Add a Comment See all 15 Comments
- They have the Chevy Cruze in the pipeline and the crossover Enclave and Traverse are selling well enough to bring workers back recently. Maybe it was just too many brands and too many models for the U.S. market. We will see how it goes the rest of this year.
- Reply to this comment
- 1ST. REGARDING :GM To Exit Bankruptcy ...THE STORY MENTIONED THAT THE SIGNS WOULD CHANGE FROM BLUE TO GREEN....HAS ANYONE DONE THE MATH FOR REFACING THOSE SIGNS. TAXPAYERS WOULD HAVE TO PAY FOR THE GREEN SIGN..MORE WASTED MONEY. I AM LOOKING INTO GETTING A SIMPLE SIGN FOR MY BUSINESS AND THAT COSTS ABOUT 6K TO REFACE THESE SIGNS WOULD PROBABLEY COST 2-4K EACH. WHY WAIST THE TAXPAYERS MONEY, NO ONE PAYS ATTENTION TO THE COLOR TO SYMBOLIZE A GREENER COMPANY. JUST BY CHANGING THE EXPENSIVE COMMERCIAL SIGN AND LOGOS FROM BLUE TO GREEN WILL NOT MAKE THE COMPANY ANY GREENER AND IT IS A WAIST OF TAXPAYERS MONEY. 2ND WILL THE POEPLE THAT OWN GM CARS HAVE TO RETURN THE CAR OR PAY THE FINANCE AMOUNT SINCE IT IS WRITTEN OFF. HOW UNFAIR IS THAT? WHY SHOULDN'T THEY GET A BRAKE?
- Reply to this comment
- but leaner and greener, cleansed of debts and burdensome contracts that nearly dragged it into liquidation. "
Yeah, cleansed of all those annoying and pesky creditors who in good faith provided GM with labor, equipment, parts, and all the rest on CREDIT! The silly notion that they would actually get PAID crossed their minds I'm sure.
But silly foolish creditors they are! GM not only gets to keep their stuff and skip off w/o paying for it, but they get to SELL the stuff. - Reply to this comment
- Good for GM. After all if a taxpayer has problems and goes bankrupt, they will get bailed out too and emerge from bankruptcy in a few months and keep their assets so why not GM?
No wait, now that I think about it, if a taxpayer goes bankrupt they lose everything, have to pay credit cards regardless for 6 years, and are not allowed to "emerge from bankruptcy" for 10 years.
Never mind, I got carried away with all the excitement. - Reply to this comment
- If you smart-***** have a more efficient way to save a floundering company and the close to 100k jobs related to its existence, I'm sure the government would be more than happy to listen.
- Reply to this comment
-
- If the automobile was never invented and we were riding horses, those jobs wouldnt be there anyway. GM and Detroit were and are bound to fail, as their existence is predicated upon the dumb sheeple of America- that's you! continuing to spend money you don't have about every 5 years on a new car that loses 25-50% of it's value the moment it leaves the lot, all to keep up with the latest STYLES!
As people are finding out, Mr Visa card is no longer like it was, neither are those cushey 0% interest car loans, it's wake up and smell the foul air time! hello, you dont need a $25,000 new machine every 5 years for the STYLE!
Of course GM et al build the dam things to last only that long anyway.
- Newster1
"If the automobile was never invented and we were riding horses, those jobs wouldnt be there anyway." You don't know what you're talking about and frankly, you don't make much sense. Your opinion has absolutely no structure other than just stating a fact about the trend in consumerism. Regardless of the fact people like to purchase new vehicles, there are countless jobs depending on the success of GM. For you to make such an ignorant speculation that Detroit and GM "were and are bound to fail" just shows your complete disregard for your fellow countrymen, or "dumb sheeple" as you prefer to call them. Whatever that means.
- If the automobile was never invented and we were riding horses, those jobs wouldnt be there anyway. GM and Detroit were and are bound to fail, as their existence is predicated upon the dumb sheeple of America- that's you! continuing to spend money you don't have about every 5 years on a new car that loses 25-50% of it's value the moment it leaves the lot, all to keep up with the latest STYLES!
- "...the "new GM" will become government-owned..."
does that mean Obama will have to give up his private Jet? - Reply to this comment
- Well looky there, Obama motors is up and running!
- Reply to this comment
-
- Odd, GM got money first under GW Bush.
Racist related Amnesia is such a sad thing.
"Dec 19, 2008 ... White House Green Lights Automaker Bailout. President Bush Announces $17B In Loans"
- Odd, GM got money first under GW Bush.
How gold pays for 
