As Yogi Berra once said, "This is like deja-vu all over again." Yesterday was the deadline for parties to file objections to the General Motors asset sale, and several were indeed filed. If some of this sounds familiar, it's because similar objections were filed during Chrysler's bankruptcy proceedings. For instance, on Friday, attorneys general from 10 states jointly-filed an objection, saying that the so-called New GM's "purchase of substantially all of the operating assets of the debtors should not include an impenetrable shield which insulates (the new GM) from all future product liability claims." The AGs are upset because under the current plans, New GM basically won't be held responsible for existing or future product liability claims related to vehicles sold before the formation of the new company. This echoes similar objections raised during the Chrysler proceedings, and if you use that as a measuring stick, things don't look good for the AGs or the injured parties (present or future) on whose behalf they're raising the objections. When the Supreme Court cleared the way for Chrysler's sale to Fiat, similar claims filed by consumer groups were essentially denied. Fiat-owned "New Chrysler" is not responsible for prior liability claims, leaving injured parties with little to no recourse.

Joining the AGs were attorneys representing over 50,000 retired union steelworkers and engineers who stand to lose out on over $3B USD in retirement and health insurance benefits they were guaranteed under the Old GM, a company that will have little to no value once the asset sale to the new company is completed. As things stand, the retirees' claim against Old GM is unsecured. Similarly, lawyers representing 1,500 other unsecured bondholders filed an objection saying that "Many of these family and noninstitutional bondholders are facing the prospect of significant losses of their retirement and life savings by the proposed GM restructuring, while simultaneously watching other unsecured creditors who by law are similarly situated receive disproportionately larger payments." Translation: some unsecured bondholders are more equal than others.

Once again, these objections are similar to ones raised -- and ultimately dismissed -- during the Chrysler bankruptcy. While the GM bankruptcy is indeed a new and entirely separate process, the federal government -- which will become the majority stakeholder in the New GM once it exits bankruptcy -- would obviously like to see the GM proceedings move along and conclude in a manner similar to Chrysler's.

With the objections officially filed, it's all in the court's hands. So now we wait to see what happens.

[Source: The Detroit News]


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