General Motors Exit From Bankruptcy Delayed

July 10, 2009 - PRLog -- There were some objections filed by bondholders of General Motors and its labor unions to the automaker's latest plan to sell assets to a separate company that may soon come out from under bankruptcy protection.

These objections filed by bondholders, shareholders, GM's labor union, retirees, some consumer groups and a handful of states and cities may halt or at least severely slow down the expected smooth transition through and out of Chapter 11.

A group that calls itself The Unofficial Committee of Family and Dissident GM Bondholders felt that the unfair treatment from General Motors when compared to the other shareholders needed to be addressed. This group of bondholders felt they should be receiving more than a 10% share if the sale of GM's assets to the other new company should go through successfully. The United Automobile Workers union is slated to get a 17.5% stake under the sale.

This same group accused the federal government and General Motors of unjustly pushing the case as quickly as possible through the bankruptcy process at the expense of the bondholders. They state that this is dividing the assets of the new company among only a few select groups. Robert Gerber, a bankruptcy judge, stated that this group has the power to raise objections during the GM bankruptcy process. However, any objections or arguments do not bear the same weight as that of an official committee.

This group states it represents about 1,500 stakeholders with holdings that total over $400 million. They are looking for permission from courts to create a formal committee with the power to negotiate directly with General Motors. As a formal committee, this group would be able to negotiate separately from other banks and investment firm bondholders.

General Motors spokeswoman, Renee Rashid-Merem, refused to comment on the objection raised by this group stating nothing has been discussed regarding the outcome of bankruptcy court proceeding. GM's restructuring plan is to sell the bulk of its assets to a new company whereby the federal government would receive a 60 percent stake from the sale. The Canadian government stands to receive 12.5% from the deal and the United Automobile Workers union is slated to receive 17.5%. Other unsecured bondholders would receive 10 percent and existing General Motors shareholders may be wiped out.

It's never good to be on the raw end of any deal. However, for consumers and dealerships, the success of the sale and emergence from bankruptcy is pivotal. This will reinvigorate the value of GM vehicles. Car buying dealerships such as Quick Cash Auto {http://www.quickcashauto.com} buy many cars manufactured by General Motors as well as other automakers. They, like many other cash-for-car businesses, would like to see GM arise from Chapter 11 as quickly as possible. The successful sale of GM assets will bring some stability to the automaker, dealerships, car resale values and the overall strength of the economy.

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