UPDATE: GM Will Ask Court Monday Tap Half Of Bankruptcy Loan
02 Juni 2009 - 12:36AM
Dow Jones News
General Motors Corp. (GM) will ask a bankruptcy judge Monday for
permission to tap about half the $33 billion in bankruptcy
financing being provided by the U.S. and Canadian governments.
Harvey Miller, an attorney for the auto maker, said at a court
hearing that GM has just $2 billion in cash and that it has an
"urgent" need to access the government loan.
The $33 billion in aid from the U.S. and Canada is intended to
support GM during what it hopes will be a quick trip through
bankruptcy. It plans to sell the bulk of its assets to a new
company controlled by the U.S.
GM was in court Monday afternoon for the first time since filing
for bankruptcy to ask Judge Robert Gerber of the U.S. Bankruptcy
Court in Manhattan to approve routine requests, known as first-day
motions, intended to allow it to continue operating.
Gerber approved GM's request to make payments to troubled
"critical" parts makers while in bankruptcy through a U.S. Treasury
program for troubled parts makers and its own supplier-aid
initiative.
The auto maker feared a collapse of any of its core suppliers
would lead to a costly work stoppage. Top-tier suppliers Visteon
Corp. (VSTN) and Metaldyne Corp. filed for bankruptcy protection
recently amid turmoil in the U.S. auto industry. GM's main
supplier, Delphi Corp. (DPHIQ), has been in bankruptcy for almost
four years.
Separately, the U.S. Trustee's office, an arm of the Justice
Department that monitors bankruptcy proceedings, announced at
Monday's hearing that GM's unsecured creditors are scheduled to
meet Wednesday at 10 a.m. EDT in New York. At that meeting, a
committee will be formed to represent the creditors during the
bankruptcy case.
The bankruptcy loan requires GM to win court approval for the
sale of its assets by July 10. The financing comes on top of about
$20 billion in loans provided to the auto maker by the U.S.
Treasury Department.
The auto maker's cash levels are now well below the amount it
would need to operate on its own. Without the $20 billion in U.S.
government loans GM received, the picture would be far worse.
GM had more than $24 billion in liquidity at the end of the
first quarter a year ago, as the company's non-U.S. operations
helped offset multi-billion dollar losses in North America. At the
end of March, GM had $11.6 billion in liquidity that was largely
offset by federal loans.
-David McLaughlin and Sharon Terlep, Dow Jones Newswires;
201-938-4296; david.mclaughlin@dowjones.com; Sharon Terlpe; Dow
Jones Newswires;