The bankruptcy judge overseeing the GM bankruptcy proceedings approved the sale of assets to a government-owned company on Sunday. This will allow GM to emerge from Chapter 11 quickly, less than 40 days after filing for bankruptcy protection. By selling the assets, GM will be majority-owned by the U.S. Treasury Department, holding a 60.8% stake in the new GM. Judge Robert Gerber wrote in his opinion "GM cannot survive with its continuing losses and associated loss of liquidity, and without the governments funding that will expire in a matter of days."

Judge Gerber went on to say that "...the only alternative to an immediate sale is liquidation, a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates." Judge Gerber’s ruling rejected objections filed by key creditors, including consumer and asbestos victims as well as retirees from three unions. The judge ruled that liability claims pending before GM filed for bankruptcy can be classified as bad assets and left behind in bankruptcy.

After the "new" GM emerges from bankruptcy, the "old" GM is expected to spend 2-3 years in bankruptcy while the bad assets are sold off or shut down. Also holding stakes in the new GM are the Canadian government with 11.7%, United Auto Workers retiree health-care trust with 17.5% and unsecured creditors with 10%.

Jeffrey Herrick