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US Court Gives Green Light to Car Giant GM Bankruptcy

World | July 6, 2009, Monday // 10:24

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Bulgaria US Court Gives Green Light to Car Giant GM Bankruptcy: US Court Gives Green Light to Car Giant GM Bankruptcy

The new streamlined General Motors will be 60% owned by the US government. Photo by BGNES

US court has approved a bankruptcy plan for car giant GM, which allows the firm to transfer its profitable assets to a new government-backed company.

Judge Robert Gerbert announced the decision late Sunday, saying the sale would prevent "the death of the patient on the operating table", the BBC reported.

GM filed for bankruptcy protection on June 1, saying it would be forced to liquidate if the plan was not approved.

The new streamlined General Motors will be 60% owned by the US government.

"If GM liquidates, there will not only be nothing for stockholders - there will be nothing for unsecured creditors", Judge Gerbert said in a 96-page opinion.

In effect, a new, smaller GM is being created with a reduced workforce.

The firm is getting USD 60 B in financing from the US Treasury, which gives the US government a 60% share in the "new" GM, while the United Auto Workers union would have 17,5%.

Canada's government would have a 12% share, and GM bondholders would own about 10% in the new company.

The new firm is set to be launched in mid-July.

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