GMAC Expects Smooth Transition for New GM
The launch of a new and independent General Motors will not impact the automaker’s relationship with GMAC Financial Services, the bank holding company said after Sunday’s approved sale of GM’s assets to a U.S Treasury-sponsored entity.
The launch of a new and independent General Motors will not impact the automaker’s relationship with GMAC Financial Services, the bank holding company said after Sunday’s approved sale of GM’s assets to a U.S Treasury-sponsored entity.
“In conjunction with the closing of the sale, the contracts GM has with GMAC will be transferred to the new GM entity,” read the statement issued by GMAC, which learned of the approved sale on Monday. “GMAC is pleased to conduct its business operations with the new GM entity and to be part of the solution to stabilize and strengthen the U.S. auto industry.”
In his ruling, U.S. Judge Robert Gerber cleared the way for the automaker’s emergence from bankruptcy protection by approving the sale of substantially all of GM’s assets to NGMCO Inc., an entity funded by the U.S. Treasury. In court filings, Judge Gerber said the sale is necessary to preserve the historic company.
“As nobody can seriously dispute, the only alternative to an immediate sale is liquidation — a disastrous result for GM’s creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates,” Gerber wrote in his ruling. “Bankruptcy courts have the power to authorize sales of assets at a time when there still is value to preserve — to prevent the death of the patient on the operating table.”
Judge Gerber’s ruling is expected to be confirmed by noon Thursday, the deadline for a Chicago law firm, which represents people who have sued GM in several auto accident cases, to file an appeal. Once closed, the current General Motors Corporation will change its name to Motors Liquidation Company, which is expected to liquidate all remaining assets under the supervision of a new board of directors and the Bankruptcy Court.
In connection with the closing of the transaction, NGMCO will change its name to General Motors Company. It will also continue to operate under GM’s corporate and sub brands. Additionally, the new company will acquire GM’s strongest operations, as well as its competitive operating structure — the result of recent agreements with the United Auto Workers (UAW) and the Canadian Auto Workers (CAW).
Additionally, GM’s subsidiaries outside of the United States will be acquired by the new company and are expected to continue to operate without interruption.
The new GM will be headquartered in Detroit and will be led by Fritz Henderson, president and CEO, and Edward Whitacre, Jr., chairman of the board of directors.
“A healthy domestic auto industry remains vital to the global economy and we deeply appreciate the support the United States, Canadian and Ontario governments and taxpayers have given GM, and the sacrifices that have been made by so many,”
Henderson said in the company’s release. “This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades. Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.”
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