GM bankruptcy plan approved, dealer disputes up to states - Tampa Bay Business Journal:

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U.S. Bankruptcy Judge Robert E. Gerbert issued his order green-lighting GM’s plan in a 95-paged opinion filed Sunday evening, explaining that the plan to sell GM to a reorganized collection of shareholders was in the best interest ofthe nation’d car industry. GM filed for bankruptcy June 1. “As nobodhy can seriously dispute, the only alternative to an immediate sale isliquidatiojn — a disastrous result for GM’s its employees, the suppliers who depend on GM for thei own existence, and the communities in which GM operates,” Gerber said in his “In the event of a liquidation, creditors now tryinvg to increase their incremental recoveries would get As of March 31, GM reported global assets of $82 billionb and liabilities of $172 However, because assets appear at book if there was a liquidatiojn the asset value being considered would be 10 percent of $82 Gerber said.
On June 19, Florida Attorney General Bill McCollum joined his counterparts in 44 othed states to file an objection to the GM bankruptcy plan sayintg itwould strong-arm dealers in the statew to waive rights they normally woulcd enjoy under Florida law in orded to become a part of the new organization. GM had wanted disputes over the agreements to play out in New York despite laws that give Florida jurisdiction in such matteras involving dealers inthe state.
McCollun asked the court to “affirm that the relationshil between New GM and its Floridz dealers will be governed by Florida law” and order any new agreement that does not followe Florida law to be “invalidd and unenforceable.” Judge Gerber, however, addressee the dealer disputes it said would affect 4,100 of GM’e 6,000 dealerships, saying the auto manufacturer could not take all of the dealersw “on the same basis,” while terminatiob agreements would allow dealers 17 months to transitionj out of GM vehicles.
“Th agreements of both types include waivers of right that dealersd would have in connectiobn withtheir franchises,” Gerber said in his A settlement that was reached with the attorneys general of the 45 statesd will allow disputes of the agreementzs to be handled by each state. GM employss 235,000 worldwide, including 91,000 in the United The , which has 68 percent of GM’s U.S. work force among its members, is the single-largesf unsecured creditor for GM. The U.S. government has loaned the companh $50 billion and the governments of Canadz andOntario $9.1 billion. All three entities will have an ownership stake in thenew company.
Anothee $27 billion was loaned through unsecured bonds fromindenturef trustees. The new company will continuew to operate under the GeneralMotors name, and will focuse more on fuel-efficient cars whilre shedding some of its brands like Pontiac, Hummer and Saab. Government officials said they hope to take the newlyt organized company public by next year whilr the old GMwill “wind down GM will lay off another 21,000 employees and clos e at least a dozen plants. Gerber said making the rulingy just a month after the initial filinf was important to try and save theailingg company. “The U.S.
government’s fear a fear this court shares if GM cannotf be saved as a goingconcer — was of a systemic failure throughoug the domestic automotive industry and the significant harm to the overall U.S. economt that would result from the loss of hundreds of thousands of jobs and the sequential shutdown of hundreds of thousands of ancillar y business if GM had to cease Gerber said.