GM urges judge to approve sale

An attorney for General Motors urged a bankruptcy judge yesterday to approve the automaker's sale plan, saying that the only other alternative would be a liquidation of the company's assets that would have "horrific" consequences.

But an attorney for a trio of bondholders opposed to General Motors' sale told the judge to call the government's bluff and require the automaker to restructure itself through a more traditional Chapter 11 process instead of through the quick sale of its assets.

U.S. Bankruptcy Court Judge Robert Gerber took no action yesterday when he adjourned a three-day hearing without indicating when he will rule on the company's plan to sell its good assets to a new company.

However, the judge asked GM's attorneys to submit a proposed order that would be entered if the sale were to be approved. They said they would do so by tonight or tomorrow. Gerber is expected to rule some time after that.

GM attorney Harvey Miller said the government appears committed to cutting off funding to GM if the sale is not approved by next Friday.

"Essentially the objectors are asking you to play Russian roulette," Miller said, adding that ignoring the deadline would put the futures of GM's employees, retirees and creditors all at risk.

GM's government-backed plan for a quick exit from Chapter 11 protection hinges on the sale of most of its assets to a new entity, allowing the automaker to leave behind many of the costs and liabilities that have made it unprofitable.

Harry Wilson, an Obama administration task force member, testified on Wednesday that a quick sale is needed, because the government cannot keep sinking billions of tax dollars into the company for an open-ended period of time with no guarantee of success.

Michael Richman, an attorney for bondholders opposed to GM's plan, told Gerber yesterday that while the company may be powerless to fight the government's demands, the court can "push back" to protect the interests of all the company's stakeholders.

The trio of bondholders Richman represents hold just a fraction of GM's unsecured debt. One of the members bought his bonds for just 2 cents on the dollar, while the other two spent no more than 20 cents on the dollar for theirs.