Thursday July 9, 09:04 PM
Road cleared for GM bankruptcy exit
By Amandine Ambregni
NEW YORK (AFP) - The road was cleared Thursday for General Motors (NYSE: GM - news) to exit from bankruptcy protection after a court-imposed stay preventing the sale of its assets to a new company was lifted.
GM expects to close the deal "as soon as possible," spokeswoman Julie Gibson told AFP.
GM president and chief executive officer Fritz Henderson is scheduled to host an hour-long press conference at 9:00 am (1300 GMT) Friday at the automaker's Detroit (DETROIT.SN - news) headquarters.
The biggest US automaker, which filed for bankruptcy protection on June 1 and has vowed to emerge as a leaner, more profitable company once freed from its burdensome debts, won court approval Sunday for the asset sale.
However, Judge Robert Gerber imposed a four-day stay on the decision in order to give creditors an opportunity to file objections.
A last-minute appeal was filed Thursday by the family of a car accident victim, but a district court judge "denied the request for a stay," a court source who asked not to be named told AFP.
Two other groups of creditors asked Gerber to extend a stay on the sale of the assets while their appeals were heard, but the New York bankruptcy judge dismissed their motions Tuesday.
"It's extremely unlikely that they will get a higher judge to issue a stay," said John Pottow, who specializes in bankruptcy law at the University of Michigan Law School.
A clear precedent was recently set when the Supreme Court refused to delay the sale of Chrysler (Xetra: 710000 - news) 's assets to a new company run by Italy's Fiat (Milan: F.MI - news) despite creditor objections, Pottow noted.
Once the world's largest corporation, GM will emerge as a dramatically smaller automaker with fewer brands and employees, and a diminished global footprint.
But while GM's operating costs will be significantly lower, it could be a while before they are able to sell enough vehicles to make a profit, cautioned Rebecca Lindland, an analyst with IHS Global Insight.
"Their biggest problem is perception, and that's the hardest to fix," Lindland said in a telephone interview.
While GM's product offerings are strong, they have had trouble getting consumers to take them out for a test drive due to years of quality problems and bad press.
Meanwhile, overall auto sales continue to be extremely weak after collapsing last fall amid a credit crunch and financial market meltdown.
"They need to get new buyers excited about their products," Lindland said.
As with Chrysler, GM's old corporate entity will be liquidated under supervision of the bankruptcy court, but the new GM will not be burdened by the lengthy process.
The US government -- which has provided some 50 billion dollars in financing -- will receive a 60.8 percent stake in the new company.
Canada, which provided 9.1 billion dollars in loans, will have an 11.7 percent stake and a United Auto Workers union retiree healthcare trust fund will hold 17.5 percent.
The "Old GM" will retain a 10 percent stake in order to allow creditors to recover some of their losses.
President Barack Obama, whose auto task force spearheaded the GM restructuring plan, has said his administration has no intention of nationalizing the automaker over the long term and will not be participating in its day-to-day operations.
A senior member of the task force testified last week that the government could begin to sell its stake as early as 2010, once the new company is ready to launch a public stock offering.
GM was able to move through the process swiftly because it spent months preparing for the bankruptcy process and reaching agreements with its main union and most of its creditors.
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