General Motors gets court approval to sell substantially all of its assets; decision appealed

By Jennifer Lanning Drey

Portland, Ore., July 6 - General Motors Corp. received court approval from the U.S. Bankruptcy Court for the Southern District of New York for the sale of substantially all of its assets to NGMCO, Inc., an entity funded by the U.S. Department of the Treasury, according to a GM news release.

Following the court ruling, a group of individual accident litigants appealed the decision, according to a Monday court filing.

In connection with the closing of the sale transaction, NGMCO will change its name to General Motors Co.

The U.S. Department of the Treasury will own 60.8% of the new GM's common stock, while the UAW Retiree Medical Benefits Trust will own 17.5% of the stock and the Canada and Ontario governments will own 11.7% of it. The old GM will own 10% of the new stock.

Additionally, the old GM and the UAW Retiree Medical Benefits Trust will hold warrants exercisable for 15% and 2.5% of the interests in the new GM, respectively.

Also in connection with the closing, the current GM will change its name to Motors Liquidation Co., and retained assets will be wound down or sold.

A new board will oversee that process and the liquidation of the company under the supervision of the bankruptcy court.

The court approval of the sale includes a four-day stay before closing on the sale can occur, but GM expects the sale to close soon, according to the release.

Competitive cost structure

According to the release, the new company will acquire GM's strongest operations and have a competitive cost structure, partly as a result of recent agreements with the United Auto Workers and Canadian Auto Workers.

In addition, the new GM will have lower leverage and a stronger balance sheet, which when combined with a lower break-even point, will allow it to reduce its risk, operate profitably at much lower volume levels and to reinvest in the business.

GM's subsidiaries outside the United States will be acquired by the new company and are expected to continue to operate without interruption.

"This has been an especially challenging period, and we've had to make very difficult decisions to address some of the issues that have plagued our business for decades," Fritz Henderson, president and chief executive officer of GM, said in the release.

"Now it's our responsibility to fix this business and place the company on a clear path to success without delay."

Board appointees

The UAW Retiree Medical Benefits Trust and the Canadian government each may nominate one member to serve on the board of the new GM.

The retiree benefits trust has selected auto industry analyst Stephen Girsky.

Also selected to serve on the board of the new GM are six current members of the GM board, including Erroll Davis, Neville Isdell, Kent Kresa, Phillip Laskawy, Kathryn Marinello and Fritz Henderson.

The Canadian government representatives and four additional board members to be identified by the U.S. Treasury will be announced at a later date.

GM, a Detroit-based automaker, filed for bankruptcy on June 1. Its Chapter 11 case number is 09-50026.

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