Motors Liquidation CEO Al Koch wants court approval for a plan to wrap up operations at "Old" GM.
General Motors is ready to close up shop and disappear for good. The “old” General Motors Corp., that is, the one that went into Chapter 11 last year.
Formally known as Motors Liquidation Co., it’s all that’s left of the bankrupt side of the business, abandoned plants and other assets that were to be used to help cover the billions of dollars in liabilities that the new GM shed as part of its court-ordered reorganization.
Al Koch, the reorganization specialist who has been serving as CEO of Motors Liquidation, hopes to get court approval for a final plan that would divide those remaining assets into four individual trusts. Approval could come by early 2011, though probably not in time for the “new” GM’s upcoming IPO, according to company sources.
Numerous creditors initially tried to block or revise the GM bankruptcy filing, last year, but their demands ultimately were sidelined by the Obama Administration, which came up with roughly $50 billion in federal assistance to keep the automaker alive. In all, Motors Liquidation has received over 70,000 claims worth more than $275 billion. Old GM managers say they have since resolved or rejected about $150 billion of those.
Among those who now have a stake in new GM are bondholders, who themselves lost $27 billion as part of the bankruptcy. But they were given a 10% stake in the new company and warrants to purchase another 15%.
One of the four trusts Motors Liquidation hopes to create will be responsible for resolving claims by unsecured creditors. Another will oversee an $836 million environmental clean-up program at 90 former General Motors plant sites. Selling off those facilities has been a key part of old GM’s activities. Some will return to automotive production, notably including a Delaware assembly line that has been purchased by Fisker Automotive, a start-up company developing a line-up of plug-in hybrid-electric vehicles. Another 17 sales are now in negotiations.
The other trusts will relate to asbestos-related claims against GM and remaining litigation-based claims.
In a statement, Motors Liquidation CEO Koch heralded the pace at which the asset liquidation process has been moving, while adding that the operation “could serve as templates for other big bankruptcies in the future.”