Road Cleared for GM Bankruptcy Exit

July 9, 2009
A stay preventing the sale of its assets to a new company was lifted.

After a court-imposed stay preventing the sale of its assets to a new company was lifted, the road was cleared on July 9 for General Motors to exit from bankruptcy protection.

GM expects to close the deal "as soon as possible," spokeswoman Julie Gibson said.

GM, which filed for bankruptcy protection on June 1 and has vowed to emerge as a leaner, more profitable company once freed from its burdensome debts, won court approval on July 5th. However, Judge Robert Gerber imposed a four-day stay on the decision in order to give creditors an opportunity to file objections.

A last-minute appeal was filed on July 9, but the district court judge "denied the request for a stay," a court source who asked not to be named said. Two other groups of creditors have asked the New York court to extend a stay on the sale of the assets while their appeals were heard, but Gerber dismissed their motions on July 7 in a decision.

"It's extremely unlikely that they will get a higher judge to issues a stay," said John Pottow, who specializes in bankruptcy law at the University of Michigan Law School. A binding precedent was recently set when the Supreme Court refused to delay the sale of Chrysler's assets to a new company run by Fiat despite creditor objections, Pottow noted.

Copyright Agence France-Presse, 2009

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