This is an update to a post from June 29th. A judge approved the sale of GM to itself.
This is one of the weirder things I've ever heard of. General Motors to seek approval to sell itself:
General Motors Corp (GMGMQ.PK) is heading to bankruptcy court on Tuesday to seek approval to sell its assets to a "New GM" in a plan to reinvigorate the automaker under U.S. government ownership.
GM is seeking approval for the sale from U.S. bankruptcy Judge Robert Gerber just 30 days after filing for Chapter 11. Under the deal, brokered by the Obama administration's autos task force, the company would sell its assets under Section 363 of the bankruptcy code to a "New GM" and continue to operate its best assets, like Chevrolet and Cadillac, while gaining access to billions in funding from the U.S. Treasury.
GM's old assets would remain behind in bankruptcy court to be liquidated.
The deal faces several objections from bondholders and those concerned about the fate of its dealers, but no competing bidders have emerged as an alternative to the U.S. government's $60 billion financing for GM, including a proposed equity investment of $50 billion that would give the U.S. Treasury a 60 percent ownership stake.
Naked Capitalism explains why the Section 363 of the bankruptcy code is being used.
Key to why things turned out as they did is the use of section 363 of the bankruptcy code, which allows a company to sell assets without creditor approval and before a re-organization plan can be submitted. The sale produces cash available to creditors in the eventual liquidation of the company. The sold assets can continue to operate as before, but in a re-organized fashion.
The article continues to suggest using this section of bankruptcy law as a stealth reorganization might be blocked as it is at least not in the spirit of section 363.
We should also note the beyond belief, no auto industry background, of the new management.
Many press articles now mention Obama Motors or Government Motors.
So what would be the names of new car models? Obamanot, YesWeCanMakeItinChina&StillBeAnAmericanCar, Summersmobile, Cap&TradePoot, GeithnerGuzzler, DeficitDaewoo, Stimulateyourado...