Old GM liquidation OK'd
MARCH 31,2011
Mid-December deadline set; environmental cleanup plan also approved with added $51M
David Shepardson / Detroit News Washington Bureau
Washington — A federal bankruptcy judge has signed an order officially approving a plan to liquidate the remains of old General Motors Corp. by mid-December.
Judge Robert Gerber in New York also approved a cleanup plan reached between old GM and the Environmental Protection Agency.
Late Tuesday, Gerber approved a consent decree that included another $51 million settlement to cover dozens of sites. That is in addition to a previously announced $773 million nationwide deal to clean up 89 polluted sites in 14 states, including 47 in Michigan.
The move should clear the way for creditors and former bondholders of old GM to get shares in new GM by mid-April. It also will result in the canceling of old GM stock, which still trades over the counter.
A total of 150 million new shares and warrants to purchase 123 million shares in new GM will be distributed to creditors and to pay for other claims, including the environmental trusts and to wind down the remainder of the estate.
Kirk Ludtke, an auto analyst at CRT Capital, recommended in a research note Wednesday that investors buy some outstanding old GM bonds that are trading at around 28 percent of face value, because he believes they will be worth more once they are exchanged for shares of new GM stock.
The U.S. government, which gave GM a $49.5 billion bailout and still owns 33 percent of new GM, has endorsed the wind-down plan. The Canadian and Ontario governments gave GM a separate $9.5 billion bailout, and they also urged approval of the plan.
New GM was formed by the sale of old GM's "good" assets to a new government-sponsored company that emerged from bankruptcy in July 2009.
Old GM, now known as Motors Liquidation Co., will go out of business later this year — and no later than Dec. 15, the company told Gerber.
dshepardson@detnews.com
