Ghost of Old GM Will Be Around For a While -- Like, 100 Years
The self-proclaimed "New General Motors" prefers to act as if Old GM simply ceased to exist when GM declared bankruptcy in June 2009. Since GM is trying to float an initial public offering, the company tends to stress the fact that it's off to a "fresh start."
But you can't simply make more than a dozen massive car plants disappear, or many of the other assets that GM jettisoned in bankruptcy. That's not to mention tens of thousands of GM employees and their jobs.
Besides manufacturing plants, the list of properties "Old GM" is trying to unload includes a church and even a golf course, according to the company's web site. Old GM was renamed Motors Liquidation Co.
As the name implies, liquidation is its reason for being, as in, "Everything Must Go!" Not to worry, the company has plenty of uses for any money it can raise through the sale of its distressed assets. Motors Liquidation filed a Chapter 11 plan on Aug. 31 that spells out four priorities, each of which gets its own dedicated trust fund.
For starters, the company reports it has more than 70,000 claims against it, potentially totaling more than $275 billion. Motors Liquidation said more than $150 billion in claims have already been eliminated or resolved. Motors Liquidation says it is managing more than 900,000 contracts, covering more than 65,000 ex-business partners.
Another trust is to be set up for "environmental remediation." Auto plants can be tough on the environment. Motors Liquidation says it can have most of the work done or at least "well under way" within five years. However, the plan calls for funding adequate to set up site testing and maintenance for up to 100 years (yes, 100 years).
Third, a trust is to be set up to handle the claims of unsecured GM creditors who got left holding IOUs when GM went bankrupt. They're slated to get GM stock instead of cash. Motors Liquidation owns 10 percent of GM's common stock, plus warrants for a further 15 percent.
Fourth, Motors Liquidation is setting up a separate trust to handle asbestos litigation. That's for both present and future claims.
Stating the obvious, this is a terrible time to be selling plants and equipment to build more cars, when the U.S. economy doesn't need any more car-building capacity. After all, that's why GM dumped these facilities in the first place.
However, Motors Liquidation has racked up a few victories, like selling a Wilmington, Del. assembly plant to Fisker Automotive Inc. for the production of hybrid electric cars; the sale of a facility in Pontiac, Mich., to create a movie studio; and an agreement to sell a plant in Strasbourg, France, back to GM. That's expected to save 1,200 jobs, Motors Liquidation said.
As much as "New GM" would like it, these facilities not going to disappear overnight. On the contrary, they could still be casting a shadow 100 years from now.
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