407 B.R. 463 (Bkrtcy.S.D.N.Y. 2009), 09-50026 (REG), In re General Motors Corp.

Docket Nº:09-50026 (REG).
Citation:407 B.R. 463
Opinion Judge:ROBERT E. GERBER, Bankruptcy Judge.
Party Name:In re GENERAL MOTORS CORP., et at., Debtors.
Attorney:Weil, Gotshal & Manges LLP, by Harvey R. Miller (argued), Stephen Karotkin (argued), Joseph H. Smolinsky (argued), New York, NY, for Debtors and Debtors in Possession. Kramer Levin Naftalis & Frankel LLP, by Kenneth H. Eckstein (argued), Thomas Moers Mayer (argued), Robert Schmidt, Jeffrey S. Tra...
Case Date:July 05, 2009
Court:United States Bankruptcy Courts, Second Circuit

Page 463

407 B.R. 463 (Bkrtcy.S.D.N.Y. 2009)

In re GENERAL MOTORS CORP., et at., Debtors.

No. 09-50026 (REG).

United States Bankruptcy Court, S.D. New York.

July 5, 2009

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Appearances: 1

Weil, Gotshal & Manges LLP, by Harvey R. Miller (argued), Stephen Karotkin (argued), Joseph H. Smolinsky (argued), New York, NY, for Debtors and Debtors in Possession.

Kramer Levin Naftalis & Frankel LLP, by Kenneth H. Eckstein (argued), Thomas Moers Mayer (argued), Robert Schmidt, Jeffrey S. Trachtman, New York, NY, for the Official Committee of Unsecured Creditors.

Lev L. Dassin, Acting United States Attorney for the Southern District of New York, by David S. Jones (argued), Jeffrey S. Oestericher, Matthew L. Schwartz (argued), Joseph N. Cordaro, and Cadwalader, Wickersham & Taft LLP, by John J. Rapisardi, New York, NY, Counsel to the United States of America.

Cleary Gottlieb Steen & Hamilton, by James L. Bromley (argued), Avram E. Luft, Cohen, Weiss and Simon LLP, by Babette A. Ceccotti (argued), New York, NY, for The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, AFL-CIO.

Patton Boggs LLP, by Michael P. Richman (argued), Mark A. Salzberg (pro hac vice) (argued), James C. Chadwick (pro hac vice), Melissa Iachan, New York, NY, for The Unofficial Committee Of Family & Dissident GM Bondholders.

The Coleman Law Firm, by Steve Jakubowski (argued), Elizabeth Richert, Chicago, IL, for Individual Tort Litigants Callan Campbell, Kevin Junso, Edwin Agosto, Kevin Chadwick, and Joseph Berlingieri.

Schnader Harrison Segal & Lewis LLP, by Barry E. Bressler (pro hac vice) (argued), Richard A. Barkasy (pro hac vice), Benjamin P. Deutsch. New York, NY, for Ad Hoc Committee of Consumer Victims of General Motors.

Stutzman, Bromberg, Esserman & Plifka P.C. by Sander L. Esserman (pro hac vice) (argued), Robert T. Brousseau (pro hac vice), Peter D'Apice, Jo E. Hartwick (pro hac vice), Dallas, TX, for Ad Hoc Committee of Asbestos Personal Injury Claimants.

Orrick, Herrington & Sutcliffe LLP, by Roger Frankel (argued), Richard H. Wyron, Washington, D.C., by Lorraine S. McGowen, Alyssa D. Englund, New York, NY, counsel to the Unofficial GM Dealers Committee.

Kennedy, Jennik & Murray, P.C., by Thomas M. Kennedy (argued), Susan M. Jennik, New York, NY, for IUE-CWA.

Nebraska Attorney General Jon Bruning, by Leslie C. Levy, Karen Cordry (argued), Lincoln, NE, for the State of Nebraska and on behalf of the Ad Hoc Committee of State Attorneys General.

Oliver Addison Parker, Lauderdale By The Sea, FL, pro se.

N.W. Bernstein & Associates, LLC, by: Norman W. Bernstein (argued), Rye Brook, NY, for the Trustees of Environmental Conservation and Chemical Corporation Site Trust Fund.

Caplin & Drysdale Chartered, by Elihu Inselbuch, Esq., Rita C. Tobin, Esq., New York, NY, by Peter Van N. Lockwood, Esq., Ronald E. Reinsel, Esq. (pro hac vice) (argued), Washington, D.C., for Mark Buttita, personal representative of Salvatore Buttita.

Vedder Price P.C., by Michael J. Edelman, Michael L. Schein (argued), Erin Zavalkoff-Babej, New York, NY, for Export Development Canada.

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Robinson Brog Leinwand Greene, Genovese & Cluck, P.C., by Russell P. McRory (argued), Fred B. Ringel, Mitchell Greene, Robert R. Leinwand, New York, NY, and Myers & Fuller P.A., by Richard Sox (pro hac vice), Shawn Mercer (pro hac vice), Robert Byerts (pro hac vice), Tallahassee, FL, for the Greater New York Automobile Dealers Association.

Gibson, Dunn & Crutcher LLP, by David Feldman (argued), Matthew J. Williams, Adam H. Offenhartz, New York, NY, for Wilmington Trust Company, Indenture Trustee.

Kelley, Drye & Warren LLP, by David E. Retter, Pamela Bruzzese-Szczygiel, Jennifer A. Christian (argued), New York, NY, for Law Debenture Trust Company of New York, as Proposed Successor Indenture Trustee.

New York State Department of Law by Susan Taylor (argued). Albany, NY, for Environmental Protection Bureau.

Levy Ratner, P.C., New York, NY, by Suzanne Hepner, for United Steelworkers.

Gorlick Kravitz & Listhaus P.C., by Barbara Mehlsack, New York, NY, for International Union of Operating Engineers Locals 18S, 101S, and 832S.

Farella Braun & Martel LLP, by Neil A. Goteiner (argued), Dean M. Gloster (pro hac vice), Nan E. Joesten (pro hac vice), San Francisco, CA, for General Motors Retirees Association.

Public Citizen Litigation Group, by Adina H. Rosenbaum, Allison M. Zieve, Washington, DC, for Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates, and Public Citizen.

Otterbourg, Steindler, Houston & Rosen, P.C., by Jonathan N. Helfat, Steven B. Soll, New York, NY, for GMAC LLC.

Attorneys for the State of Texas, by J. Casey Roy (argued), Austin, TX, on behalf of the Texas Dep't of Transportation, Motor Vehicle Division.

Diana G. Adams, by Diana G. Adams, Linda A. Riffkin, Tracy Hope Davis, Andrew D. Velez-Rivera, Brian Shoichi Masumoto, New York, NY, United States Trustee.


ROBERT E. GERBER, Bankruptcy Judge.

Findings of Fact 475
1. Background 475
2. GM's Dealer Network 475
3. GM's Suppliers 476
4. GM's Financial Distress 476
5. U.S. Government Assistance 476
6. GM's First Quarter Results 479
7. The 363 Transaction 479
8. The Liquidation Alternative 481
9. Fairness of the Transaction 481
10. Specifics of the Transaction 481
(a) Acquired and Excluded Assets 481
(b) Assumed and Excluded Liabilities 481
(c) Consideration 482
(d) Ownership of New GM 482
(e) Other Aspects of Transaction 483
(f) The Proposed Sale Order 483
11. Contingent Liabilities 483
12. Agreement with UAW 484
13. Need for Speed 484
14. Ultimate Facts 485
Discussion 486
1. Sale Under Section 363 486
(a) Utilization of Section 363 486
(b) Compliance with Standards for Approval of Section 363 Sales 493
(c) " Sub Rosa" Plan 495
(d) Recharacterization or Subordination of U.S. Treasury Debt 498
(e) Asserted Inability to Credit Bid 499
2. Successor Liability Issues 499
(a) Textual Analysis 501
(b) Caselaw 503
3. Asbestos Issues 506
4. Environmental Issues 507
5. Splinter Union Retiree Issues 509
6. Dealer Issues 512
7. ECC Trust 516
8. " Equally and Ratably" Issues 517
9. Unauthorized Use of TARP Funds Issues 518
10. Cure Objections 519
11. UAW Settlement Objections 519
12. Stockholder Objections 520
13. Miscellaneous Objections 520
Conclusion 520

Page 473 In this contested matter in the jointly administered chapter 11 cases of Debtors General Motors Corporation and certain of its subsidiaries (together, " GM" ), the Debtors move for an order, pursuant to section 363 of the Bankruptcy Code, approving GM's sale of the bulk of its assets (the " 363 Transaction" ), pursuant to a " Master Sale and Purchase Agreement" and related documents (the " MPA" ), to Vehicle Acquisitions Holdings LLC (the " Purchaser" ) 2-a purchaser sponsored by the U.S. Department of the Treasury (the " U.S. Treasury" )-free and clear of liens, claims, encumbrances, and other interests. The Debtors also seek approval of the assumption and assignment of the executory contracts that would be needed by the Purchaser, and of a settlement with the United Auto Workers (" UAW" ) pursuant to an agreement (the " UAW Settlement Agreement" ) under which GM would satisfy obligations to an estimated 500,000 retirees. GM's motion is supported by the Creditors' Committee; the U.S. Government (which has advanced approximately $50 billion to GM, and is GM's largest pre-and post-petition creditor); the Governments of Canada and Ontario (which ultimately will have advanced about $9.1 billion); the UAW (an affiliate of which is GM's single largest unsecured creditor); Page 474 the indenture trustees for GM's approximately $27 billion in unsecured bonds; and an ad hoc committee representing holders of a majority of those bonds. But the motion has engendered many objections and limited objections, by a variety of others. The objectors include, among others, a minority of the holders of GM's unsecured bonds (most significantly, an ad hoc committee of three of them (the " F & D Bondholders Committee" ), holding approximately .01% of GM's bonds),3 who contend, among other things, that GM's assets can be sold only under a chapter 11 plan, and that the proposed section 363 sale amounts to an impermissible " sub rosa " plan. Objectors and limited objectors also include tort litigants who object to provisions in the approval order limiting successor liability claims against the Purchaser; asbestos litigants with similar concerns, along with concerns as to asbestos ailments that have not yet been discovered; and non-UAW unions (" Splinter Unions" ) speaking for their retirees, concerned that the Purchaser does not plan to treat their retirees as well as...

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