Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York has granted GM’s motions for debtor in possession (DIP) financing from the U.S. Treasury and the Canadian and Ontario governments.
The final ruling, one of several issued late yesterday, follows a preliminary one on June 1st when GM declared bankruptcy, which authorized GM up to use up to $15 billion from the estate. Now GM can spend as much as $33.3 billion in DIP financing.
The money, of course, is coming from the U.S. Treasury and the Canadian Federal, as well as the Ontario provincial governments.The money will be used for, among other things, GM’s normal liquidity requirements, including employee wages, health care benefits, supplier payments, and other general operating expenses.
While not necessary indicative of how the rest of the case will proceed, the rulings are the latest indication that, like Chrysler, GM will move out of bankruptcy protection at lightning speed compared to the usual glacially-slow lawyer-fee-driven process.
GM needs to emerge as a new GM as quickly as possible to remove the insolvent stigma, and get back to the business of selling cars and trucks. Year-to-date through May, GM’s sales are off 44%, compared to an industry drop of 37%.