General Motors has moved a step closer to solvency. A bankruptcy court judge has said yes to the carmaker’s most profitable assets coming out of bankruptcy protection and passing into government ownership.
Under the deal, an entity christened ‘New GM’ will operate the best parts of the old company, including its Chevrolet and Cadillac brands. ‘New GM’ will have a less expensive workforce, a smaller dealer network, and much less debt. The rest of the company will be liquidated. The US Treasury has agreed to provide 60 billion dollars (43 billion euros) in financing. In return American taxpayers ends up owning 60 percent of GM. The bankruptcy court said the only alternative would be liquidation, which would be disastrous for GM’s creditors, employees and suppliers. Meanwhile, the sell-off of GM’s European divisions -Opel and Vauxhall – continues but the German economy minister has said the sale to Canadian car parts maker Magna is not a done deal and others are waiting in the wings.