NEW YORK — General Motors’ Chief Executive was grilled by a string of lawyers Tuesday about his company’s bid to sell its "good” parts into a new company and emerge from bankruptcy protection.
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 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.
At a packed Manhattan courthouse Tuesday, Fritz Henderson was questioned for around five hours by attorneys for the various parties challenging the sale, including bondholders, consumer groups and unions.
Despite U.S. Judge Robert Gerber’s urging the attorneys to keep their arguments concise and to avoid redundancies, the hearing dragged on as a parade of lawyers made their way up to the podium.
"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.”
Henderson wasn’t fazed by his lengthy stay on the stand, answering questions quickly and directly for the most part.
When asked about the current condition of GM, Henderson testified that June sales were "slightly better than expected” excluding fleet sales.
Fate of claims
Consumer groups and several individuals with product-related liability claims are objecting to the sale because people with pending product-related liability claims against GM will be forced to seek compensation from "Old GM,” the collection of mostly unprofitable assets leftover from the sale where there likely will be nothing left to pay their claims.
Early on in the hearing, Mark Salzberg, an attorney for a group of bondholders, questioned why GM would opt for a sale plan instead of a restructuring plan, charging that the automaker took that route to make it harder for its creditors to negotiate.
But Harvey Miller, an attorney from GM, questioned the validity of the bondholder group’s challenge, noting that it only has three members, one of which bought his bonds for 2 cents on the dollar, while the other two spent no more than 20 cents on the dollar for theirs.
Besides the bondholders, a trio of labor unions are trying to block the sale. Unlike the UAW, which brokered a deal for a stake in the company, those unions say they won’t have anything to pay for retiree health care.
Henderson said retiree benefits for the three unions cost GM about $26 million a month.
by the associated press
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