Bankruptcy court approves GM restructuring plan

07 July 2009 04:33  [Source: ICIS news]

SINGAPORE (ICIS news)--The US government will own 60.8% of embattled carmaker General Motors (GM) after the Bankruptcy Court for the Southern District of New York approved late on Monday the company’s restructuring plan.

The remaining stake in the company would be split between the United Auto Workers (UAW) Retiree Medical Benefits Trust (17.5%), the Canadian and Ontario governments (11.7%) and the old General Motors Corporation (old GM) (10%).

Under the approved restructuring plan, GM would sell a substantial amount of its assets together with the company’s “strongest operations” to NGMCO, Inc, an entity funded by the US Treasury.

Upon the completion of the sale, NGMCO would then change its name to General Motors Company while the current General Motors Corporation will change its name to Motors Liquidation Company.

“The new GM will have lower leverage and a stronger balance sheet, which when combined with a lower break-even point, will allow it to reduce its risk, operate profitably at much lower volume levels,” the automotive giant said.

GM filed for Chapter 11 bankruptcy protection on 1 June as part of a government-led plan to restructure the 100 year-old company.

The move represented the third largest corporate bankruptcy in US history after investment bank Lehman Brothers and telecoms group WorldCom.

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By: Bohan Loh
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