NEW YORK — General Motors’ bid to sell its “good” parts into a new company and emerge from bankruptcy protection began Tuesday as hundreds of lawyers converged on a Manhattan courthouse.
GM, whose June 1 filing for bankruptcy protection was the fourth-largest in U.S. history, is hoping to avoid a lengthy sale hearing that could drag out the process and postpone its emergence from Chapter 11. Last month, objections from a group of bondholders and others dragged out rival Chrysler LLC’s sale hearing for three days.
On Tuesday, GM CEO Fritz Henderson was questioned for several hours by attorneys for the parties challenging the sale, including bondholders, consumer groups and unions.
Despite U.S. Judge Robert Gerber’s urging for the attorneys for concise arguments, Tuesday’s hearing dragged on as a parade of lawyers made their way up to the podium to question Henderson.
After the hearing, which started more than an hour late, stretched into mid-afternoon without a lunch break, Gerber chastised the attorneys for taking too much time and not being prepared enough.
“I think people have forgot why we’re here and what we have to accomplish,” Gerber said sharply. “I’m not going to deny anybody due process, but I expect the questioning to be more focused.”
When asked about the condition of GM, Henderson testified that the automaker’s June sales were “slightly better than expected” excluding fleet sales, which he partly attributed to the company’s progress toward an exit from Chapter 11.
Under a government-backed deal, General Motors Corp. will sell most of its assets to a newly created company, 60 percent owned by the U.S. government. The Canadian government will get a 12.5 percent stake while the United Auto Workers union will take a 17.5 percent share to fund its health care obligations. Unsecured bondholders receive the remaining 10 percent.
Existing GM shareholders are expected to be wiped out.
The remaining pieces of the company, including some closed plants, will become the “Old GM” and be liquidated.