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GM may emerge from bankruptcy protection early

Source: PTI
June 19, 2009 15:56 IST
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General Motors is considering to relaunch itself as a more streamlined automaker by mid-July, a month earlier than planned by the company when it filed for bankruptcy protection on June one, says a media report.

"General Motors is preparing to relaunch itself as a leaner company by mid-July, a month earlier than envisaged when the Detroit carmaker filed for bankruptcy protection on June 1," UK daily Financial Times said.

The judge overseeing GM's Chapter 11 case has set Friday as the deadline for objections to its restructuring plan.

The report noted that GM and its advisers are confident that none of the roughly 500 objections submitted so far would derail the timetable, under which the court is due to consider the sale of most of its assets to a new entity on June 30.

"It really is remarkably quiet," FT said quoting one person familiar with the process.

Further attributing another person close to the matter, the report said, the company was drawing up plans to reveal its new board of directors and possibly some senior management changes around the middle of July.

The report stated that most of the objections raised so far relate to suppliers' concerns about the amount and timing of payments by the 'new' GM under contracts taken by the existing company. 

Assets of the 'old' GM would remain in Chapter 11 to be sold or wound down for the benefit of creditors.

The possible stumbling blocks include a potential backlash from unsecured creditors as well as dissidents among holders of $27 billion in unsecured bonds, the report noted.

The official committee of unsecured creditors met Fritz Henderson, GM's chief executive, last week. Tom Mayer, the committee's legal adviser has said that the committee was still examining its options. He said the unsecured creditors had obtained an extension for objections until June 22, the FT reported.

At the time GM filed for court protection, holders of about 54 per cent of the bonds had approved its offer of a 10 per cent equity stake and warrants for another 15 per cent. GM is restructuring under a seldom-used provision of the US bankruptcy code: a normal process would require approval of two-thirds of the securities.

The US government is set to emerge as GM's biggest shareholder, with a 60 per cent stake.

Robert Gerber, the judge hearing GM's case, has a debtor-friendly reputation. If all goes to plan, the hearing would take a few days, it added.

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