Court hears old GM wind-down could cost £760 million
1 July 2009

GM’s wind-down in the US as part of it emerging from Chapter 11 bankruptcy protection proceedings could end up costing $1.25 billion (£760 million).

GM is currently going through court proceedings in the US, which will see a new GM formed out of its best assets, including Chevrolet and Cadillac. The new GM will be mainly funded by the US treasury.

The US treasury has set aside $950 million (£575 million) to pay for the closing and selling of old plants left behind by new GM and paying priority claims to creditors.

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GM chief Fritz Henderson said the cost could rise because of GM’s environmental liabilities. He conceded that it would be very difficult to sell or dispose of GM’s factories, and there were likely to be high levels of contamination left behind should whatever the outcome.

The US treasury has said it will leave sufficient funds in old GM to pay for all necessary wind down costs.

The court hearing in the US heard that new GM would be 60 per cent owned by the US treasury, a worker fund would get 17.5 per cent and Canadian government entities would get 11.7 per cent.

Bondholders and unsecured creditors would own the remaining stake in GM.

Mark Tisshaw

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