"edited" to pertain to the thread...
NEW YORK (Reuters) -- If General Motors wins court approval for its asset sale this week, a "New GM" could be ready to make an initial public offering in 2010, a U.S. Treasury official testified in U.S. bankruptcy court today.
The official, Harry Wilson, a member of the Obama administration's auto task force, was in court to argue that the only viable option to save GM is a sale of its main assets to a "New GM" backed by the federal government, as the automaker sought court approval for the deal.
"We could not find any reasonable measure of opinion from anyone ... who felt that General Motors could survive a traditional Chapter 11," Wilson told the court.
He testified that last December the government was "effectively the lender of last resort" for GM, which gave it significant leverage over the automaker's restructuring. He said the government wants GM to stay in bankruptcy for only 30 to 40 days.
Wilson estimated that GM has received $10 billion in funding since its bankruptcy filing. The U.S. government provided the bulk of the funding, with about 15 percent coming from the Canadian government, he said.
If the GM deal is approved, the company will be able to sell its best assets, including Chevrolet and Cadillac, under Section 363 of the bankruptcy code to a "New GM," while the U.S. Treasury would provide $60 billion in financing to GM, including a proposed $50 billion that would give the U.S. Treasury a 60 percent ownership stake in the company.
Under the government-backed plan, the UAW would gain a 17.5 percent stake in New GM, the Canadian government would own about 12 percent, and GM bondholders are expected to get about 10 percent.
GM's old assets would remain behind in bankruptcy court to be liquidated.
No competing bidders have emerged as an alternative to the U.S. government's plan for the automaker.
