GM receives OK to continue Vehicle Protection and Incentive programs
General Motors Corporation today reported that it has received U.S. Bankruptcy Court approval to continue honoring all vehicle warranty programs and dealer incentive plans. This and other Court orders today enable GM to assure consumers that warranty coverage on GM vehicles will continue without interruption, whether they already own a GM vehicle or intend to buy a new one; that genuine GM parts will be supplied; and that GM-trained Goodwrench specialists will perform all services.
The Court also granted approval for GM to access a new approximately $33.3 billion debtor-in-possession (DIP) financing facility from the U.S. Treasury and the Canadian and Ontario governments. The court authorized GM to use up to $15 billion of the facility on an interim basis pending a final order approving the full facility. This credit facility will be used, among other things, for the company’s normal liquidity requirements, including employee wages, healthcare benefits, supplier payments, and other operating expenses.
GM intends to make payment for goods received and services provided to it on or after the filing date in the normal course of business and in accordance with terms of existing supplier agreements.
In addition, Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York today also granted approval for a number of other first-day motions that GM made as part of its chapter 11 filings to preserve the value of GM and facilitate an expedited sale of assets to the New GM as a healthy business outside of the chapter 11 context. The orders granted by the Court will ensure that the company’s business continues to function without disruption. GM has received authorization to, among other things:
- Respect our operating and financing agreements with GMAC, supporting continued wholesale financing for dealers and retail financing for customers
- Pay dealers’ open accounts
- Pay essential suppliers and logistics providers for goods and services provided before and after the company's court filings
- Pay all non-U.S. suppliers to GM Corporation and its U.S. subsidiaries.
- Continue pay and benefits for employees and retirees; however, the amount of non-qualified pension for some executive retirees may be affected
- Preserves, on an interim basis, GM’s tax carry forwards, including a substantial amount of foreign tax credits
- Approved, on an interim basis, sale procedures and a hearing date of June 30 for the proposed sale of assets under section 363 of the U.S. Bankruptcy Code
Importantly, the Court ordered all banks to honor employee paychecks, including those dated prior to the company’s June 1, 2009 court filing.
GM’s president and CEO Fritz Henderson said, “Today’s rulings provide important assurance to customers and ensure that GM can maintain normal operations as we work to create and launch the New GM. We will proceed with continued focus on meeting the needs of our customers in everything we do.”
GM earlier today filed under chapter 11 to rapidly implement the sale of substantially all of its assets to the New GM, which will be built from GM’s strongest operations and supported by a stronger balance sheet and a competitive cost structure. Because GM’s sale of assets to the New GM already has the support of the U.S. Treasury, the UAW and a substantial portion of GM’s unsecured bondholders, GM expects the sale to be approved and consummated expeditiously.