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July 6, 2009

GM must show it can navigate choppy seas


Today marks the end of a new beginning for General Motors, for Chrysler, and indeed for Detroit.

A federal judge’s ruling late Sunday that GM may proceed with a sale of its good assets to a new company, while leaving behind billions of dollars in debts, unneeded plants and other costs, caps a swift, dramatic push by President Barack Obama to take both GM and Chrysler in and out of Chapter 11 bankruptcy in less than three months.


Obama is scheduled to visit the Detroit area July 14.

Let us hope he does not prematurely declare victory in the federal bailout of the U.S. auto industry, for this is merely Step 1 in a long and perilous journey from the brink of disaster.

Think of it this way: Uncle Sam has rushed to the aid of GM and Chrysler, two very leaky boats, and kept them from sinking.

So far.

Quick repair jobs have been done to patch leaks, shed weight and make some changes to the crews, at a cost fast approaching $50 billion.

But are these vessels really seaworthy?

Can they survive the turbulent storms that surely await them?

Signals from Obama’s auto industry auto task force leaders suggest that they are acutely aware that the worst possible outcome for Obama would be the collapse of GM and/or Chrysler a year or two after exiting bankruptcy.

Look for the federal overseers of Chrysler and especially GM, where taxpayer ownership exceeds 60%, to be very vigilant in the months ahead. They will closely scrutinize GM’s president and CEO Fritz Henderson and his new board of directors, looking for evidence that a nimbler company and culture are emerging.

The feds have changed the captains and crew of both GM and Chrysler once already, and they will not hesitate to do so again if they deem necessary.

If that’s troubling to many people in Detroit and across America, well, it’s troubling to try to steer big ships through totally uncharted waters. And that’s where we are.

For now, GM and Chrysler are poised to leave the harbor and set sail again after their rapid repair jobs. Let’s wish both a long and prosperous journey.

LINK:GM must show it can navigate choppy seas | Freep.com | Detroit Free Press
 

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Judge approves GM asset sale

Judge approves GM asset sale

Posted Monday, Jul 6, 2009, 11:57 am in Employee News

General Motors Corp. won approval late Sunday to sell its best assets to a government-owned company, paving the way for a stunningly swift emergence from Chapter 11 bankruptcy less than 40 days after GM filed for court protection, The Detroit News reported.

Once the sale closes, which is not expected before noon Thursday, the 100-year-old automaker will be majority-owned by the U.S. Treasury Department, the paper said. The government will have a 60.8 percent stake after providing more than $50 billion in financial aid to keep the iconic American company from liquidating and becoming perhaps the greatest industrial failure in the nation’s history, the News said.

“GM cannot survive with its continuing losses and associated loss of liquidity and without the governmental funding that will expire in a matter of days,” U.S. Bankruptcy Judge Robert Gerber wrote in his 95-page opinion. “As nobody can seriously dispute, the only alternative to an immediate sale is liquidation—a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence and the communities in which GM operates.”

Barring a successful last-ditch appeal by creditors to block the sale, the U.S. Treasury Department—through its Vehicle Acquisition Holdings LLC—would be able to close on the deal after noon Thursday, the paper said. GM and the Treasury Department had asked Gerber to make his ruling effective immediately, allowing the sale of GM’s assets to close as early as today, but under Gerber’s order, GM and the Treasury Department aren’t authorized to close the deal until after noon on Thursday, giving objectors a chance to file an appeal and win a court stay. But Gerber warned objectors that the government might not wait that long, the story said. (The Detroit News)
 
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