Motors Liquidation Company

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Motors Liquidation Company
FormerlyGeneral Motors Company (1908–1916)
General Motors Corporation (1916–2009)
Company type Public
Industry Automotive
Founded1908 (1908) as General Motors Company
2009 (2009) (changed name to Motors Liquidation Company)
DefunctMarch 31, 2011;12 years ago (2011-03-31)
Fate Bankruptcy and liquidation
Successor
Headquarters
Detroit, Michigan
,
United States

Motors Liquidation Company (MLC), formerly General Motors Corporation, was the company left to settle past liability claims from Chapter 11 reorganization of American car manufacturer General Motors. It exited bankruptcy on March 31, 2011, only to be carved into four trusts; the first to settle the claims of unsecured creditors, the second to handle environmental response for MLC's remaining assets, a third to handle present and future asbestos-related claims, and a fourth for litigation claims. [1]

Contents

Motors Liquidation Company's stock symbol was changed from GMGMQ to MTLQQ, effective July 15, 2009. [2] MTLQQ stock was cancelled. Its unsecured creditors were issued stock for the Motors Liquidation Company General Unsecured Creditors Trust under the symbol MTLQU.

History

Bankruptcy filing

On the morning of June 1, 2009, Chevrolet-Saturn of Harlem, a dealership in Manhattan that was owned by GM itself, filed for bankruptcy protection there, followed in the same court by General Motors Corporation (the main GM in Detroit), GM's subsidiary Saturn LLC, and Saturn LLC's subsidiary Saturn Distribution Corporation. [3] All cases were assigned to Judge Robert Gerber. [4]

The filing by the dealership declared General Motors to be a debtor in possession. [3] The Manhattan dealership's filing allowed General Motors to file its own bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York, its preferred court. Normally for such cases, the company would have filed in the courts located in the state(s) where the company is incorporated, or where it conducts operations, which for Detroit-headquartered General Motors would have been the courts in Michigan or Delaware, where it is incorporated. General Motors' attorneys, however, preferred to file in the federal courts in New York, because those courts have a reputation for expertise in bankruptcy. [5] In a press conference that began four hours and eighteen minutes after the filing, the GM Chief Executive Officer, Fritz Henderson, stressed that he intended for the bankruptcy process to move quickly. [6] In addition to Henderson's press conference, President of the United States Barack Obama made a speech from the White House four hours and three minutes after the court filing. [7]

Court schedule and motions

The General Motors bankruptcy case was formally entitled In re General Motors Corp., case number 09-50026 in the Southern District, Manhattan, New York. [8] General Motors was represented by the New York specialist law firm Weil, Gotshal & Manges. The United States Treasury and an ad hoc group of the bondholders of General Motors Corporation were also represented in court. [9]

One of the first motions filed in court was to void the leases on the seven corporate jets, and corporate aircraft hangar at Detroit Metropolitan Wayne County Airport, which the company said were no longer valuable to the company's business. A GM spokesman said that the company had found itself unable to escape the lease in 2008 when it had tried to. [8]

On June 1, 2009, the court gave interim approval to GM's request to borrow $15 billion as debtor-in-possession financing, the company only having $2 billion cash in hand. The United States Treasury had argued in court that it was the only source of such debtor in possession funding, and that without the money from the loan General Motors would have no option but liquidation. Other motions in the first-day hearing included motions to approve payments to key suppliers and to employees and distributors who are in possession of goods manufactured for General Motors. All motions passed in court without substantial objection. [9] [10]

The case schedule laid out by the court was as follows: [10]

Failed sale of Hummer

On June 1, 2009, GM announced that the Hummer brand would be discontinued. The following day GM announced that it had reached a deal to sell the brand to an undisclosed buyer. [11] Later, on June 2, 2009, the buyer was disclosed to be Chinese road equipment manufacturer Tengzhong. [12] [13] [14] Tengzhong itself confirmed the deal on their website the same day. [15] The proposed transaction was scheduled to close in the third quarter of 2009, subject to customary closing conditions and regulatory approvals; financial terms of the agreement were not disclosed. [15]

Chinese regulators refused to allow for the purchase of the brand and GM decided on February 24, 2010, to retire the brand. Despite the failed sale, GM discussed entertaining interest in part of the Hummer brand, subsequently made no effort in that direction, leaving Hummer to close.

Failed sale of Saturn

On June 5, 2009, GM announced that the Saturn brand would be sold to the Penske Automotive Group. [16] GM would continue building the Aura, Outlook and Vue for Penske for two years. However, the Penske deal failed and the Saturn division became defunct.

Sale of Saab to Spyker Cars

On June 16, 2009, it was announced that Koenigsegg and a group of Norwegian investors planned to acquire the Saab brand from General Motors. GM would continue to supply architecture and powertrain technology for an unspecified amount of time. [17] It also becomes the last brand/subsidiary from GM to be sold (Hummer was first, followed by Saturn). The deal failed on November 24, 2009. [18] GM, however, requested Spyker Cars to acquire Saab from MLC a few weeks later. But however, MLC announced it would close Saab on December 19, 2009, although this plan was later reversed. Motors Liquidation Company had until January 7, 2010, for the deadline of the revised bid. The sale of Saab to Spyker was approved on January 26, 2010, [19] and completed on February 23, 2010. [20]

Franchise dealership consolidation controversy

Since the early 1990s, GM had been trying to close dealership locations under its Project 2000. [21] [22] At the time, GM had about 9,000 franchise dealers nationwide, most selling a single brand. Many of these locations sold few vehicles and supporting them was costly for GM. [21] Under Project 2000, GM would eliminate or relocate dealerships, and also focused on establishing multi-brand locations, selling Buick, Pontiac and GMC vehicles or Cadillac, Hummer and Saab vehicles. The program was controversial with dealers, many who didn't want to close their dealership or sell their franchise rights. [23]

However, Section 363 of the Federal Bankruptcy Code allowed GM to force thousands of dealerships to forfeit their franchise rights. Dealers accused GM of fraud and theft and formed the Committee to Restore Dealer Rights. The group helped draft HR 2743 in 2009, which asserted the action taken by GM to consolidate its dealer network without compensation was illegal. However, HR 2743 died in committee, and was never reintroduced. [24]

Sale of good assets to New GM

GM's assets were sold in a section 363 sale. [9] [25] [26] [27] [28] Because the price that these assets were expected to sell for was very high, there was expected to be only one bidder in the auction, a new company NGMCO Inc. [29] This company had been formed by the United States government with a 60% stake, the federal government of Canada and provincial government of Ontario with a 12% stake, the United Auto Workers and Canadian Auto Workers unions [30] with a 17.5% stake, and the unsecured bondholders of General Motors with a 10% stake. [9] "Old GM" was renamed Motors Liquidation Company. [31]

A creditor meeting, at the New York Hilton, held by the United States Trustee Program, was scheduled for June 3, 2009. [10]

On July 10, 2009, the purchase of the ongoing operational assets and trade name of "old GM" was completed and the purchasing entity, "NGMCO Inc", [29] changed its name to "General Motors Company LLC." [31] [32] The new GM held an IPO on November 17, 2010, that raised an estimated $20.1 billion. [33]

By December 2013, the US government sold the last of its GM stock. [34] By February 2015, the Ontario government sold the last of its 4% stake in GM, [35] and by April 2015, the Canadian federal government sold the last of its own 8% GM stake. [36]

The "new" GM acquired most of the brands and the good assets of the old GM, including the Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Pontiac, SAIC-GM, SAIC-GM-Wuling, and Vauxhall brands. Pontiac was quickly phased out by October 31, 2010, GM Daewoo was renamed GM Korea in 2011 and the Daewoo brand was retired, Opel and Vauxhall were sold to Groupe PSA in 2017, and Holden was closed by the end of 2020.

The end of MLC

MLC exited bankruptcy on March 31, 2011, and was immediately carved into four separate trusts; the first to settle the claims of unsecured creditors of MLC (General Unsecured Creditors Trust); the second (RACER) to manage, perform environmental activities at, and ultimately dispose of certain remaining MLC real and personal property assets; the third to manage asbestos-related claims against MLC (Asbestos Personal Injury Trust); and the fourth for litigation claims against MLC (Action Avoidance Trust). [1] [37]

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References

  1. 1 2 "Motors Liquidation Company carved into four trusts". reuters.com. March 31, 2011. Archived from the original on September 24, 2015. Retrieved November 17, 2011.
  2. ↑ "FINRA Changes 'Old GM' (GMGMQ) Ticker To (MTLQQ), To Resume Trading Tomorrow". StreetInsider.com . July 14, 2009. Retrieved January 15, 2012.
  3. 1 2 John Hughes; Caroline Salas; Jeff Green & Bob Van Voris (June 1, 2009). "GM Begins Bankruptcy Process With Filing for Affiliate". Bloomberg.com. Archived from the original on June 13, 2010.
  4. ↑ Glater, Jonathan (June 1, 2009). "Judge in Case Is Known for His Brisk Approach". New York Times. Retrieved September 9, 2012.
  5. ↑ Tom Hals & Martha Graybow (June 1, 2009). "GM bankruptcy forever linked to Harlem dealership". Reuters.
  6. ↑ Jeremy Smerd (June 1, 2009). "General Motors' Workforce Faces Big Cuts at an 'Unadulterated Speed'". Workforce Management. Crain Communications Inc. Archived from the original on June 2, 2009.
  7. ↑ Joseph B. White (June 2, 2009). "For the New GM, A Final Challenge to Please Drivers". Wall Street Journal Online. Dow Jones & Company.
  8. 1 2 Edvard Pettersso (June 2, 2009). "General Motors Asks Judge to Void Seven Corporate Jet Leases". Bloomberg.com. Archived from the original on January 22, 2009.
  9. 1 2 3 4 5 Emily Chasan & Phil Wahba (June 1, 2009). "GM asks for bankruptcy sale in 30 days". Reuters.
  10. 1 2 3 4 Christopher Scinta (June 2, 2009). "GM Wins Approval of $15 Billion Loan, Auction Plan (Update1)". Bloomberg.com. Archived from the original on January 23, 2009.
  11. ↑ Bradsher, Keith; Bunkley, Nick (June 3, 2009). "Chinese Company Buying G.M.'s Hummer Brand". The New York Times. Retrieved May 13, 2010.
  12. ↑ Aaron Smith (June 2, 2009). "Who bought Hummer? Sichuan Tengzhong of China - Jun. 2, 2009". Money.cnn.com. Retrieved December 17, 2009.
  13. ↑ "Chinese company to buy Hummer from GM - Autos- NBC News". NBC News. June 24, 2009. Retrieved December 17, 2009.
  14. ↑ Bradsher, Keith; Bunkley, Nick (June 3, 2009). "Chinese Company Buying G.M.'s Hummer Brand". The New York Times. Retrieved May 13, 2010.
  15. 1 2 "腾中重工". Archived from the original on June 8, 2009. Retrieved June 2, 2009.
  16. ↑ David Goldman & Peter Valdes-Dapena (June 5, 2009). "GM to sell Saturn to Penske - Jun. 5, 2009". Money.cnn.com. Retrieved December 17, 2009.
  17. ↑ Goldstein, Steve (June 16, 2009). "GM, Koenigsegg reach tentative Saab deal". MarketWatch.com. Retrieved June 16, 2009.
  18. ↑ Koenigsegg backs out of deal to buy Saab AutoWeek (November 24, 2009)
  19. ↑ Saab Sale To Spyker Finalized -- Car News (Car & Driver)
  20. ↑ It’s Official: GM Finalizes Sale of Saab to Spyker Archived February 25, 2010, at the Wayback Machine -- Car & Driver Retrieved February 23, 2010
  21. 1 2 Brown, Warren (November 15, 1992). "GM'S Dealer Dilemma". The Washington Post . Retrieved September 7, 2023.
  22. ↑ Horvath, Robert (January 17, 2006). Project 2000: The Rise and Fall of Oldsmobile Division of General Motors. Booksurge. ISBN   141960600X.
  23. ↑ Bollinger, Julie (December 15, 1997). "GM dealers not partial to Project 2000 plan". Dayton Business Journal . Retrieved September 7, 2023.
  24. ↑ "congress.gov search" . Retrieved May 28, 2019.
  25. ↑ "GM Announces Agreement with U.S. Treasury and Canadian Governments Providing Fast Track to Competitive Future for "New GM"" (Press release). General Motors. June 1, 2009. Archived from the original on June 7, 2009. Retrieved July 15, 2009.
  26. ↑ "Debtors Motion to Approve the Sale Pursuant to the Master Sale and Purchase Agreement with Vehicle Acquisition Holdings, LLC, a U.S. Treasury-sponsored Purchaser, Free and Clear of Liens, Claims, Encumbrances, and Other Interests" (PDF). Court Documents and Claim Register, 363 Transaction Pleadings. General Motors Corporation. June 1, 2009. Retrieved June 3, 2009.[ permanent dead link ]
  27. ↑ Beck, Rachel (June 2, 2009). "Corporate Bankruptcy: What Investors Need to Know: When debts outweigh assets, as with GM and Chrysler, protection can help businesses reorganize or liquidate. A guide to bankruptcy's risks and rewards". Business Week. Associated Press. Archived from the original on June 12, 2009. Retrieved June 3, 2009.
  28. ↑ James Quinn (June 1, 2009). "GM files for Chapter 11 bankruptcy protection". The Daily Telegraph . London.
  29. 1 2 GM 363 Asset Sale Approved by U.S. Bankruptcy Court July 6, 2009. Accessed September 8, 2012.
  30. ↑ "GM Press Release". Wall Street Journal . June 4, 2009.
  31. 1 2 Maynard, Micheline (July 10, 2009). "A Primer on the New General Motors". New York Times. Retrieved July 10, 2009.
  32. ↑ de la Merced, Michael (July 10, 2009). "With Sale of Good Assets, G.M. Out of Bankruptcy". New York Times. Retrieved July 10, 2009.
  33. ↑ Baldwin, Clare; Kim, Soyoung (November 17, 2010). "GM IPO raises $20.1 billion - Reuters". Reuters.com. Archived from the original on September 24, 2015. Retrieved February 24, 2012.
  34. ↑ Healey, James (December 9, 2013). "Government sells last of its GM shares". usatoday.com.
  35. ↑ Keenan, Greg; Morrow, Andrew (February 4, 2015). "Ontario sells remaining GM shares acquired from bailout". Globe and Mail.
  36. ↑ Keenan, Greg (April 9, 2015). "Ottawa unloads remaining GM stock for $35.61 (U.S.) a share". Globe and Mail.
  37. ↑ "UPDATE 1-Old GM exits Chapter 11, carved into four trusts". Reuters. March 31, 2011. Retrieved December 30, 2022.

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