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Bankruptcy Court Approves GM Sell

Posted By admin || 6-Jul-2009

According to an article in the Star-Telegram, a bankruptcy judge has approved the General Motors' sell of its assets to a new company.

The article said:

"U.S. Judge Robert Gerber said in his 95-page ruling late Sunday that the sale was in the best interests of both GM and its creditors, whom he said would otherwise get nothing..."As nobody can seriously dispute, the only alternative to an immediate sale is liquidation - a disastrous result for GM's creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates," Gerber wrote in his ruling."

But the bankruptcy ruling will not go unchallenged. Already, attorneys for some of GM's bondholders, unions, consumer groups and individuals with lawsuits against the company are appealing the bankruptcy ruling saying that it's morally reprehensible and completely overlooks creditor interests in favor of the interests of GM and the government.

One decision made by the bankruptcy court has several creditors particularly upset.

The article said:

"Several consumer groups have objected to provisions in the sale that free the new company from liability for consumer claims related to incidents that occurred before GM went into bankruptcy protection."

What that means is that consumers who had claims against GM before bankruptcy will have no power to collect that claim against the new GM. However, consumers who file claims against GM after bankruptcy will have the power to collect on that claim against the new GM. The consumers with claims dated before the GM bankruptcy can attempt to collect from the "old" GM; but as Judge Gerber said they will mostly likely get nothing.

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