Categories: Headliner Date: Jun 5, 2009 Title: Hart Motors to remain openGM announced Monday it had filed Chapter 11 bankruptcy. The bankruptcy will restructure the company and allow time to repay debt. The bankruptcy also allows GM to remain open, although 2,400 of its dealerships will close. The 3,600 remaining dealerships should remain open and viable under GM’s restructuring plan.
By Robin Scott
GM announced Monday it had filed Chapter 11 bankruptcy. The bankruptcy will restructure the company and allow time to repay debt. The bankruptcy also allows GM to remain open, although 2,400 of its dealerships will close. The 3,600 remaining dealerships should remain open and viable under GM’s restructuring plan.
President Obama commented on the bankruptcy stating, it is a “credible plan” designed to revive the automaker and protect taxpayers. Chapter 11 is used to reorganize a business. A corporation exists separate and apart from its owners, the stockholders. The Chapter 11 bankruptcy case of a corporation does not put the personal assets of the stockholders at risk other than the value of their investment in the company’s stock.
The bankruptcy filing includes a written disclosure statement and a plan of reorganization. The disclosure statement is a document that must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization. The contents of the plan must include a classification of claims and must specify how each class of claims will be treated under the plan. Creditors whose claims are impaired and their contractual rights are to be modified or who will be paid less than the full value of their claims under the plan, vote on the plan by ballot.
The U.S. trustee plays a major role in monitoring the Chapter 11 case and supervising its administration. The U.S. trustee is responsible for monitoring the debtor in possession’s operation of the business and the submission of operating reports and fees and the applications for compensation and reimbursement by professionals, plans and disclosure statements filed with the court, and creditors’ committees. The U.S. trustee conducts a meeting of the creditors, and creditors may question the debtor under oath at the meeting concerning the debtor’s acts, conduct, property, and the administration of the case.
The U.S. trustee also imposes certain requirements on the debtor in possession concerning matters such as reporting its monthly income and operating expenses, establishing new bank accounts and paying current employee withholding and other taxes.
GM has reported on its website that they are absolutely not going out of business but has entered Chapter 11 “to launch the New GM through the powerful tools of the Bankruptcy Code. GM will take the necessary actions to transition operations and launch a highly competitive New GM. Importantly, GM has the support of the U.S. and Canadian governments and the UAW in this effort.”
This and other Court orders enable GM to assure consumers that warranty coverage on GM vehicles will continue without interruption, whether they already own a GM vehicle or intend to buy a new one. Further, GM parts will be supplied and that GM-trained Goodwrench specialists will perform all services. A hearing to approve the sale of substantially all of GM’s assets to the New GM has been scheduled for June 30th.
GM’s President and CEO Fritz Henderson said, “Today’s rulings provide important assurance to customers and ensure that GM can maintain normal operations as we work to create and launch the New GM. We will proceed with continued focus on meeting the needs of our customers in everything we do.”
In Dalhart, Hart Motors has received notice from GM that they are one of the 3,600 dealerships that will remain open. Terms of the restructuring and launch of the new GM prohibit dealership owners from discussing the specific terms of their contracts, but Tim McMillin, owner of Hart Motors commented on
Wednesday, “We will remain open, and will be this time next year as well.”
The U. S. Government will put another $30 billion dollars into GM, along with the $20 Billion already provided. That and the bankruptcy effectively makes the U. S. Government a 60% shareholder in the new GM. The roll of the government in GM is currently under discussion, but so far, government officials, including President Obama, have stated that the government will not be exercising shareholder rights or get involved in the day to day operations of the company.