General Motors is ready to close up shop and disappear for good. The “old” General Motors Corp., that is, the one that went into Chapter 11 last year.
Formally known as Motors Liquidation Co., it’s all that’s left of the bankrupt side of the business, abandoned plants and other assets that were to be used to help cover the billions of dollars in liabilities that the new GM shed as part of its court-ordered reorganization.
Al Koch, the reorganization specialist who has been serving as CEO of Motors Liquidation, hopes to get court approval for a final plan that would divide those remaining assets into four individual trusts. Approval could come by early 2011, though probably not in time for the “new” GM’s upcoming IPO, according to company sources.
Numerous creditors initially tried to block or revise the GM bankruptcy filing, last year, but their demands ultimately were sidelined by the Obama Administration, which came up with roughly $50 billion in federal assistance to keep the automaker alive. In all, Motors Liquidation has received over 70,000 claims worth more than $275 billion. Old GM managers say they have since resolved or rejected about $150 billion of those.
Among those who now have a stake in new GM are bondholders, who themselves lost $27 billion as part of the bankruptcy. But they were given a 10% stake in the new company and warrants to purchase another 15%.