NEW YORK (Reuters) - On its first day in bankruptcy court, General Motors Corp said it would ask a federal judge to approve its proposed sale of its strongest assets in just 30 days.
At a bankruptcy court hearing in Manhattan, GMs’ lawyer Harvey Miller asked the court to set a sale hearing for June 30, in a move that will put the company’s proceedings on the same break-neck pace as rival carmaker Chrysler LLC’s bankruptcy sale.
Miller, of the law firm Weil, Gotshal and Manges, described the circumstances leading to GM’s descent into bankruptcy and told Judge Robert Gerber that a quick sale would be necessary to preserve the value of the iconic U.S. automaker.
“General Motors could no longer continue without the relief it seeks in this court,” Miller told a standing-room-only courtroom.
“In what one sense is a sad event, in another, is the occasion to begin a new era,” he continued.
The bankruptcy has become one of the most carefully orchestrated Chapter 11 filings in the history of U.S. business, but Miller said he did not expect this case to follow the same script as that of Chrysler.
“I don’t want to necessarily do everything that was done in Chrysler here,” Miller told the court.
Under a government-backed restructuring plan, the Obama administration would take a 60 percent stake in the newly-formed company made up of GM’s most profitable assets. The UAW would have a 17.5 percent stake, the Canadian government would own about 12 percent and GM bondholders would receive about 10 percent.
GM said it had no other bidders, and the deal had also gained support from about 54 percent of GM’s bondholders.
The court gave interim approval for GM to access $15 billion of debtor-in-possession funding provided by the U.S. government, as the automaker only has $2 billion of cash on hand. It is expected to seek final approval for its full $33 billion DIP financing package at a hearing later this month.
David Jones, an assistant U.S. attorney representing the U.S. Treasury, said the government was the only source of DIP financing for GM and without it the company would be forced into “immediate liquidation.” The government set a July 10 deadline for GM to complete its sale.
Judge Gerber also granted a series of administrative motions that will allow the company to pay its employees, its vendors, and continue to offer dealer incentives and honor consumer warranties.
“This is serious to a lot of people’s lives,” Gerber said, adding he believed the case to be about “saving the business, saving as many jobs as we can, saving as many suppliers as we can, and saving as many dealers as we can.”
The U.S. Trustee Diana Adams said GM would hold its organizational meeting to form an unsecured creditors’ committee on June 3 at the Hilton New York Hotel.
The case is In re: General Motors Corp, U.S. Bankruptcy Court, Southern District of New York, No. 09-50026.
Reporting by Emily Chasan and Phil Wahba, editing by Leslie Gevirtz