GM Bankruptcy: "Bad" GM Wind-Down To Cost $1 Billion Plus
July 01, 2009
NEW YORK -- The cost to wind down the "bad General Motors" after a sale of its good assets
to the U.S. Treasury is rising to more than $1 billion, a company representative testified Tuesday.
Albert Koch, appointed GM's restructuring chief who will head the old, bad GM if a sale is completed, testified in bankruptcy court that a wind-down would cost "slightly in excess of $1.25 billion." The funds, more than the $950 million budgeted, will be used to dispose of assets the "new GM" ditches and to pay some creditor claims.
GM CEO Fritz Henderson said at the hearing that environmental liabilities may drive the cost higher.
Indeed, Koch said he didn't expect much cash to be raised by selling assets, as they will be difficult to sell as many have environmental contamination issues. He estimated those liabilities at $530 million. He predicted the wind-down would take two to three years.
Meantime, a date of July 10 has been set as the deadline for the good assets to move into the new GM or the automaker will lose its government funding and be forced to liquidate, Henderson said.
The court is expected to approve the sale, hearings for which continue on Wednesday, in a matter of days. GM is expected to emerge from Chapter 11 bankruptcy proceedings even quicker than Chrysler, which did so in 41 days.
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