GM clears important hurdle in bankruptcy

The Chrysler bankruptcy set the standard, and now GM is steamrolling its way through the bankruptcy process with the support of the Obama administration.

A federal judge approved a plan by General Motors late on Sunday to sell its best assets to a new, government-backed company, a crucial step for the automaker to restructure and complete its trip through bankruptcy court.

The decision by the judge, Robert E. Gerber of United States Bankruptcy Court in Manhattan, came after three days of hearings to address the 850 objections to the restructuring plan and after he had received a revised sale order from G.M.’s lawyers.

A group of individual accident litigants appealed the ruling on Monday morning, Bloomberg News reported.

In his 95-page opinion, Judge Gerber wrote that he agreed with G.M.’s main contention: that the asset sale was needed to preserve its business in the face of steep losses and government financing that is scheduled to run out by the end of the week.

“Bankruptcy courts have the power to authorize sales of assets at a time when there still is value to preserve — to prevent the death of the patient on the operating table,” Judge Gerber wrote.

Many bankruptcy experts expressed doubt that Chrysler and GM could move so quickly through bankruptcy, but these are extraordinary times, and the courts seem sympathetic to the arguments by the government that a speedy, negotiated reorganization with the support of the government offers the only viable alternative to a destructive liquidation.

  

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