GM'S ROAD OUT of bankruptcy has been cleared today by US Federal Judge Robert Gerber, who ruled yesterday that the beleagured manufacturer can begin selling its assets to a "New GM" entity.
The ruling is a major boost to GM's plan to get out of Chapter 11 bankruptcy protection and paves the way for the new entity to be created, into which the still-functional parts of General Motors will be transplanted.
With GM's recovery plan hinging on its ability to start afresh as a new company, the ruling comes as welcome news to the automaker and the US Government - which has played a key part in keeping the manufacturer afloat over the past few months and will become a majority shareholder in the New GM.
The sale strategy will allow the company to cast off various of its liabilities, costs and non-performing assets, however the latest ruling has predictably raised the ire of some of GM's bondholders and creditors - as well as the State of Texas. An appeal against the decision has yet to be announced.
The New GM is expected to emerge from bankruptcy as a leaner, more focused corporation; with lower labour costs and less debt. A sizeable chunk of GM's present assets won't be transferred to the new company after the sale goes through, and will likely be cut adrift and sold off on the market.
These assets include 14 assembly and manufacturing plants, warehouses and other property, as well as the Hummer, Opel, Saturn and Saab brands.
Intriguingly, GM appears to be holding onto the soon-to-be-defunct Pontiac brand, although a revival is most definitely not a short-term possibility.
An official sale date has not been firmed up, however with the US Treasury expected to cut off funding to GM by July 10, expect more news in the next few days.