naked capitalism

It looks like I am being proven wrong on this one. I was of the view that the GM bankruptcy could get bogged down in court, since it had many more parties who could protest the use of section 363 to expedite asset sales than Chrysler did, some of whom also appeared to have better arguments.

Now it was a given that the company would jurisdiction-shop and pick a favorable venue. so the progress so far isn’t completely unanticipated. But I had also assumed that the unhappy creditors would also look for friendly judges, and at least some of them would be successful enough to throw some sand in the gears. That does not appear to be happening.

From Reuters:

A U.S. judge on Sunday approved General Motors Corp’s bankruptcy sale, in a move that will allow the company’s most profitable assets to exit bankruptcy protection under government ownership….

Under the deal, New GM will operate the best parts of the old company, including its Chevrolet and Cadillac brands, with a less-expensive workforce, smaller dealer network, and much less debt.

The “old GM,” which includes unpopular brands and unneeded factories and liabilities, will remain behind in bankruptcy court to be liquidated.

The U.S. Treasury has agreed to provide $60 billion in financing to the new company, including a proposed $50 billion that would give the U.S. Treasury a 60 percent stake in the company.

The UAW would gain a 17.5 percent stake, the Canadian government would own about 12 percent, and GM bondholders would be expected to obtain about 10 percent of the new company.

At a three-day sale hearing that concluded July 2, some small bondholders had objected to the deal, but no other bidders presented an alternative, and the 100-year-old automaker warned of “catastrophic” consequences to the auto industry if the sale was blocked.

A successful sale of GM’s main assets is the second big victory for the Obama administration’s auto task force. It helped broker the sale of Chrysler LLC to a group led by Italy’s Fiat SpA last month.