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Motors Liquidation Company logo

Motors Liquidation Company (Pinksheets MTLQQ) is the company left over from General Motors' bankruptcy. Motors Liquidation Company is continuing General Motors' bankruptcy court proceedings which will ultimately lead to settling liability claims. <ref>http://www.motorsliquidationdocket.com</ref> <ref>Template:Citation/core{{#if:|}}</ref> Motors Liquidation Company announced on July 10, 2009 in relation to its equity and debt investors:<ref>General Motors Aims for IPO Next Year</ref>

Management continues to remind investors of its strong belief that there will be no value for the common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios. Stockholders of a company in chapter 11 generally receive value only if all claims of the company's secured and unsecured creditors are fully satisfied. In this case, management strongly believes all such claims will not be fully satisfied, leading to its conclusion that the common stock will have no value.

None of the publicly owned stocks or bonds issued by the former General Motors Corporation (now renamed "Motors Liquidation Company"), including its common stock formerly traded on the New York Stock Exchange under the ticker symbol "GM", are or will become securities of General Motors Company (the "new GM"), which is an independent separate company. All of these securities relate to Motors Liquidation Company, and will be treated in accordance with the provisions of the U.S. Bankruptcy Code and the rulings of the Bankruptcy court.


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Motors Liquidation Company's stock symbol was changed from GMGMQ to MTLQQ, effective July 15, 2009.

History

Bankruptcy filing

On the morning of 1 June 2009, Chevrolet-Saturn of Harlem, a dealership in Manhattan that is 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. All cases were assigned to Judge Robert Gerber.<ref> Template:Citation/core{{#if:|}} </ref>

The filing by the dealership declared General Motors to be a debtor in possession.<ref> {{#if: GM Begins Bankruptcy Process With Filing for Affiliate

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</ref> The dealership's filing allowed General Motors to file its own bankruptcy petition in the Southern District court of Manhattan, 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.<ref name=Reuters1> {{#if: GM bankruptcy forever linked to Harlem dealership

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</ref> In a press conference that began four hours and 18 minutes after the filing, the GM Chief Executive Officer, Fritz Henderson, stressed that he intended for the bankruptcy process to move quickly.<ref> {{#if: General Motors' Workforce Faces Big Cuts at an ‘Unadulterated Speed’

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In addition to Mr Henderson's press conference, President of the United States Barack Obama made a speech from the White House four hours 3 minutes after the court filing.<ref> {{#if: For the New GM, A Final Challenge to Please Drivers

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</ref>

Obligation to Privately Owned Individual Franchise Dealerships

Prior to General Motors bankruptcy filing, US State Law governed the minimum required distance between same-franchise dealers; known as the six-mile rule. The six-mile rule prohibits same-franchise dealers from locating within six-miles of each other. In 2001 General Motors formally declared Project 2000 would be implemented as part of a brand-channeling strategy designed to consolidate its network of privately owned individual franchise dealerships and reduce the number of locations from 7,300 to 3,800. Project 2000 served as the primary mechanism for combining single-point Buick-Pontiac-GMC dealer locations together forming a single corporate brand division (BPG). Project 2000 also targeted single-point Cadillac-Hummer-Saab dealer locations and allowed single-point Chevrolet and Saturn dealer locations to stand on their own. Project 2000 calculated the fair market value for each individually owned dealer franchise to be $3,000 per vehicle based on total volume from any one of the previous three-years. Upon agreement of a fair market value, dealers with interest in selling their franchise rights were free to negotiate with each other, and ultimately execute a buy-sell agreement which contained mutually agreed upon terms & conditions required to legally sell and transfer franchise property & ownership rights. Section 363 of the Federal Bankruptcy Code expedited General Motors Project 2000 efforts to reduce its dealer network and circumvent state & federal criminal laws prohibiting the illegal sale of property, or transfer of ownership by an unauthorized party. Thousands of family-owned, [profitable], well-capitalized dealerships were forced to forfeit their franchise rights to a neighboring dealer-competitor selected by General Motors. Compensation has not yet been awarded in cases where individual dealer franchise property & ownership rights were transferred for the purpose of granting such rights to a nearby dealer selected by General Motors. In-addition to reports of fraud, theft, filed with the police, GM dealers joined to from the Committee to Restore Dealer Rights"[1]. The committee to restore dealer rights is responsible for helping draft HR 2743 which asserts the action taken by General Motors to consolidate its dealer network by transferring individual dealer franchise ownership & property without compensation was illegal. As of February 22, 2010, HR 2743 remains in committee.

Court schedule and motions

The General Motors bankruptcy case is formally entitled "In re General Motors Corp.", and is case number 09-50026 in the Southern District, Manhattan, New York.<ref name=Pettersso /> General Motors is 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 are also represented in court.<ref name=Reuters2> {{#if: GM asks for bankruptcy sale in 30 days

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One of the first motions filed in court was one to void the leases on the seven corporate jets, and corporate aircraft hangar at Detroit Metropolitan Wayne County Airport, for being no longer valuable to the company's business — a lease that the company had, according to its spokesman, found itself unable to escape in 2008 when it had tried to.<ref name=Pettersso> {{#if: General Motors Asks Judge to Void Seven Corporate Jet Leases

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On June 1, 2009, the court gave interim approval to GM's request to borrow US$ 15 billion as debtor-in-possession funding, the company only having US$ 2 billion cash in hand. The United States Treasury 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.<ref name=Reuters2 /><ref name=Scinta> {{#if: GM Wins Approval of $15 Billion Loan, Auction Plan (Update1)

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The case schedule laid out by the court is as follows:

  • 2009-06-19: Deadline for filing all objections to the sale of General Motors.<ref name=Scinta />
  • 2009-06-22: Deadline for making competing bids in the auction of General Motors' assets.<ref name=Scinta />
  • 2009-06-25: Final hearing on the bankruptcy loan.<ref name=Scinta />
  • 2009-07-10: Deadline for completion of the sale, requested by the U.S. Treasury and General Motors.<ref name=Reuters2 /><ref name=Scinta />

Sale of good assets to New GM

The plan for General Motors' bankruptcy is to auction off the company's assets in a section 363 sale.<ref name=Reuters2 /><ref name = "GM Bankruptcy Press Release-2009-06-01"> GM Announces Agreement with U.S. Treasurey and Canadian Governments Providing Fast Track to Competititve Future for "New GM" General Motors Press Release, June 1, 2009. </ref> <ref name = "Pleading-Sale to VAH LLC-2009-06-01"> {{#if: 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

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</ref><ref> {{#if: GM files for Chapter 11 bankruptcy protection

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{{#if: A Primer on the New General Motors

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</ref>

A creditor meeting, at the New York Hilton Hotel, held by the United States Trustee Program, was scheduled for June 3, 2009.<ref name=Scinta />

Hummer collapse

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.<ref> http://www.nytimes.com/2009/06/03/business/03auto.html </ref> Later, on June 2, 2009 the buyer was disclosed to be China-based Sichuan Tengzhong Heavy Industrial Machinery Company Ltd.<ref>Template:Citation/core{{#if:|}}</ref><ref>Template:Citation/core{{#if:|}}</ref><ref> http://www.nytimes.com/2009/06/03/business/03auto.html?_r=1&hp </ref> Sichuan Tengzhong itself confirmed the deal on their website the same day.<ref name = "Sichuan Tengzhong-Hummer Deal-2009-06-02">http://www.sctengzhong.com:8080/tengzhong/weben/newn.jsp?id=1158</ref> 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.<ref name = "Sichuan Tengzhong-Hummer Deal-2009-06-02"/> Credit Suisse was acting as exclusive financial advisor and Shearman & Sterling was acting as international legal counsel to Tengzhong on this transaction. Citi acted as financial advisor to GM.<ref name = "Sichuan Tengzhong-Hummer Deal-2009-06-02"/>

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 is still entertaining interests in part of the Hummer brand.

Failed sale of Saturn

On June 5, 2009, GM announced that the Saturn brand would be sold to the Penske Automotive Group.<ref>Template:Citation/core{{#if:|}}</ref> Penske is a Fortune 500 American company operated by Indy 500 racing legend Roger Penske. GM would continue building the Aura, Outlook and Vue for Penske for two years. However, the Penske deal failed and now the Saturn division is going out of business.

Sale of Saab to Spyker Cars

On June 16, 2009, it was announced that Koenigsegg and a group of Norwegian investors plan to acquire the Saab brand from General Motors. GM will continue to supply architecture and powertrain technology for an unspecified amount of time.<ref>Template:Citation/core{{#if:|}}</ref> 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.<ref>Koenigsegg backs out of deal to buy Saab AutoWeek (November 24, 2009)</ref> 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,<ref>Saab Sale To Spyker Finalized -- Car News (Car & Driver)</ref> and completed on February 23, 2010.<ref>It’s Official: GM Finalizes Sale of Saab to Spyker -- Car & Driver Retrieved February 23, 2010</ref>

Sale of most assets to New GM

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"<ref name="publish.media.gm.com"/>, changed its name to "General Motors Company LLC" after the purchase,<ref name = "NYT-Maynard-2009-07-10"/> <ref name = " NYT-Merced-2009-07-10" >{{#if: With Sale of Good Assets, G.M. Out of Bankruptcy

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Successful units transferred from MLC to GM

Pontiac remained with GM into the new GM, but it will be phased out at the end of 2010.

External links

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