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Court Clears the Way for General Motors to Sell its Assets

The U.S. Bankruptcy Court order approving the reorganization of General Motors is a slam dunk for GM.

The GM court order, dated Sunday, July 5, not only supports GM's arguments on every major point, but also refutes many of the arguments that could form the basis of possible future appeals.

That clears the way for GM to sell the assets of the restructured company to a new GM, which is majority-owned by the U.S. Treasury Department. The left-behind assets are to be sold off where possible or in any case closed.

In a sad footnote, the "old" GM that is doing the selling off and winding-down is renamed Motors Liquidation Co. The "new" GM hasn't been officially named or renamed yet, but for now it is legally referred to as NGMCO Inc. for "New GM."

Yesterday's court order reads as if GM wrote it, and in fact it borrows a lot of the language GM has used throughout the bankruptcy process.

Specifically, Judge Robert E. Gerber ruled that:

  • GM "adequately marketed" its assets to be sold; that other interested parties had a "reasonable opportunity" to make a better offer; and that the reorganization as proposed constituted the "highest or otherwise best offer."
  • The assets to be sold are "deteriorating assets," which therefore must be sold quickly; that liquidation was "the only alternative" to the proposed sale; and that failure to sell the assets quickly would result in the loss of "hundreds of thousands of auto-related jobs."
  • The sale represents the best way to "preserve and maximize" the value of GM's assets.
These points were central to GM's argument that despite criticism to the contrary, GM did its best to form a merger like the Chrysler deal with Fiat. GM also maintained all along that the GM reorganization represented the best possible deal for GM's creditors, even though some GM creditors disagreed.

In a written statement, GM called the order, "another milestone in its reinvention."

Chart: GM data, BNET Autos graphic