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US judge approves sale of GM assets

(Agencies)
Updated: 2009-07-07 14:17

NEW YORK/BANGALORE: A US judge on Sunday approved General Motors Corp's bankruptcy sale in a move that will allow the company's most profitable assets to exit bankruptcy protection under government ownership.

Judge Robert Gerber of the US Bankruptcy Court for the Southern District of New York in Manhattan said the sale was GM's only option and that completing it would "prevent the death of the patient on the operating table." He approved the sale just over one month after GM filed for bankruptcy, in the largest US manufacturing bankruptcy in history.

Protesters chant outside the US Bankruptcy Court during the General Motors Corp hearing in New York June 30, 2009. [Agencies]

Under the deal brokered by the Obama administration, "New GM" will emerge as a more streamlined automaker operating the best parts of the old company, including its Chevrolet and Cadillac brands, with a cheaper workforce, smaller dealer network, and much less debt. The rest of the company will be liquidated.

Gerber issued a four-day stay of the order approving the sale, which should allow it to close as early as Thursday. Such stays are typical and allow for possible appeals. One group of consumers objecting to the sale has already filed court papers for an appeal, but the dissenting bondholder group said it would drop its challenge to the sale.

Special coverage:  Global Auto Industry Woes Related readings:  GM gets the nod to sell its assets  Bankruptcy judge OKs GM sale plan  GM Europe: Talks on selling Opel near completion  GM awaits judge's ruling on sale plan  GM's worst assets set to go under hammer

The sale marks the second big victory for the Obama administration's auto task force. It helped broker the disposal of Chrysler LLC to a group led by Italy's Fiat SpAlast month.

GM, which has struggled with a sharp decline in US auto sales amid the recession this year, filed for bankruptcy protection on June 1. The company had warned of "catastrophic" consequences to the auto industry if the sale were blocked, and the US government said it could walk away from funding the iconic US automaker if a deal were not approved by July 10.

'BUSINESS DECISION'

"GM cannot survive with its continuing losses ... and without the governmental funding that will expire in a matter of days," Gerber wrote in the 95-page opinion.

Gerber shot down objections to GM's sale from dealers whose contracts are being terminated, groups of consumer and asbestos claimants that argued they will now be unable to sue GM for their injuries, and a group that calls itself the "Unofficial Committee of Family & Dissident GM Bondholders."

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