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Old GM, Meet the New GM

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By Kevin Fayle on July 06, 2009 1:00 PM

It's been a while since I posted anything on the GM bankruptcy, and the hiatus has been completely deliberate.  With so much news and speculation swirling around the proceedings, it would be easy to let the affair completely take the blog over.

But yesterday's opinion from the bankruptcy court judge definitely deserves a post, especially since one of the key points in the opinion deals with the disposition of injury lawsuits against the company.
The judge's ruling allowed GM to sell its best assets to a new company owned primarily by the US Treasury.  This company would then move forward out of bankruptcy, while the old GM stays in bankruptcy, wraps up its affairs and settles claims against it.

Under Judge Robert Gerber's opinion, those claims would include personal injury lawsuits that were filed before GM entered bankruptcy protection, as well as consumer complaints and claims by bondholders. 

Those groups are upset that their claims are relegated to the old GM under the plan since there is less of a chance that they will receive their desired compensation.  One group of accident plaintiffs has already appealed the ruling.

While Judge Gerber seemed to appreciate the groups' concerns, he wrote that "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."

See Also:
Bankruptcy judge OKs GM sale plan (AP)
Court Ruling Clears Path for G.M. to Restructure (NYTimes)
GM Asset Sale Gets Judge's Nod (Wall Street Journal)

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