With GM’s deadline for exiting bankruptcy approaching, the company announced that if it doesn’t win approval of its asset sale, it will be forced into liquidation by July 10.
Unlike Chrysler, GM failed to find a backer (other than the federal government) large enough to buy the company’s good assets, which will make up the “New GM.” GM now has no choice but to win approval of its asset sale to the federal government, or the historic American automaker will face Chapter 7--better known as liquidation.
“There is no alternative; it is liquidation or this sale. And liquidation is Draconian,” said Harvey Miller, counsel for GM.
U.S. Treasury official Harry Wilson seconded Miller’s claim that GM’s sale to the Treasury is GM’s only option. “The current transaction is the only option on the table,” argued Miller.
If GM doesn’t complete the Chapter 11 proceedings by July 10, the U.S. Treasury will withdraw its portion of the $33 billion debtor-in-possession financing. “We cannot make an open-ended commitment,” Wilson testified. “At one point, it’s better to cut one’s losses.”
Source: Automotive News