Over the holiday weekend, U.S. Judge Robert Gerber approved the bankruptcy plan for General Motors. The approval means GM is now allowed to sell its “good” assets to a “new” GM, and start with a clean slate that rids it of unsustainable debt. Had the bankruptcy plan not been approved, the Treasury Department would have cut off funding to GM by July 10 of this year. This would have forced the unthinkable: a complete liquidation of GM. Under the plan, the liabilities and debts will stay with the “old” GM, which will be effectively amputated from the new GM.
GM filed for bankruptcy on June 1, and at the time it was the fourth largest bankruptcy in U.S. history. The short turn-around of the bankruptcy approval will mean that GM can minimize its negative perception among prospective customers, and move forward. In the words of Judge Gerber, the quick ruling was needed in order to avoid “immediate and irreparable harm” to GM.
Once the sale is completed, plants can reopen, suppliers can be paid, and folks can get back to work.