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Obama task force wants ruling by July 10; foes want to call government's bluff, seek better deal
By Bree Fowler
Associated Press
Published on Friday, Jul 03, 2009
NEW YORK: The judge in the General Motors Corp. bankruptcy case adjourned a three-day hearing without indicating when he will rule on the company's plan to sell its good assets to a new company.
U.S. Judge Robert Gerber asked GM's attorneys to submit a proposed order that would be entered if the sale were to be approved. They said they would do so by tonight or Saturday. Gerber is expected to rule some time after that.
A lawyer for GM warned the court that the only alternative to GM's plan would be a liquidation of the company's assets that would have ''horrific'' consequences for everyone.
Attorney Harvey Miller said the government is committed to cutting off funding to GM if the sale is not approved by July 10. That followed testimony Wednesday from a member of President Barack Obama's automotive task force, who indicated the government has no plans to continue funding GM past next Friday if the sale is not approved by then.
GM's government-backed plan for a quick exit from Chapter 11 protection hinges on the sale of most of its assets to a new entity, allowing the automaker to leave behind many of the costs and liabilities that have made it unprofitable. The Detroit carmaker's June 1 filing for bankruptcy protection was the fourth-largest in U.S. history.
Some parties objecting to the sale argued in court that the Obama administration won't allow GM to fail.
''Essentially, the objectors are asking you to play Russian roulette,'' Miller told Gerber, adding that ignoring the deadline puts the futures of GM's employees, retirees, and creditors at risk.
Harry Wilson, the task force member who testified on Wednesday, said a quick sale is needed, because the government cannot keep sinking billions in tax dollars into the company for an open-ended period with no guarantee of success.
On Thursday, Michael Richman, an attorney for a trio of bondholders opposed to GM's plan, told Gerber to ''call the government's bluff'' and require GM to restructure itself under Chapter 11 instead of approving the quick sale of its assets. This would allow the bondholders to negotiate for more in exchange for the debt they hold, he said.
Richman said that while the company may be powerless to fight the government's demands, the court can ''push back'' to protect the interests of all the company's stakeholders.
NEW YORK: The judge in the General Motors Corp. bankruptcy case adjourned a three-day hearing without indicating when he will rule on the company's plan to sell its good assets to a new company.
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