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GM's asset sale plan approved
General Motors yesterday crossed a key step in its bankruptcy reorganization. The U.S. Bankruptcy Court for the Southern District of New York officially approved the GM asset sale plan, which means that a new GM company with a divestiture burden is about to emerge from the troubled old GM. It is understood that GM's China business has also been officially approved to enter the 'New GM'. GM's last gamble has dawned This newspaper learned yesterday from General Motors that the US Bankruptcy Court Judge Robert E.Gerber for the Southern District of New York approved General Motors' application to sell its almost wholly-owned assets to NGMCO. NGMCO is a company funded by the U.S. Department of Commerce. When the asset sale process is about to be completed, NGMCO will change its name to General Motors and continue to use the company brand 'General Motorsoperation. When the asset sale is complete, the old GM will be renamed the Auto Liquidation Corporation, and the remaining assets not incorporated into the new GM will be gradually written off or sold. General Motors CEO Henry Henderson said: 'The approval of the court marks one step closer to the birth of an independent new General Motors.' On June 1, General Motors filed for bankruptcy protection and embarked on the road of rebirth. Complete bankruptcy and reorganization within two to three months. Now, GM's last-ditch effort is in sight. Previously, bondholders and product liability claimants had contested GM's planned asset sale, but the judge ultimately concluded that if the sale of GM assets was not approved, the only alternative was liquidation. That 'would be a disastrous outcome' for GM's creditors, employees, suppliers whose survival depends on GM, and the communities in which GM operates. According to reports, the new GM will have access to GM's best business assets, a lower debt-to-equity ratio, a healthier balance sheet, and a significantly lower break-even point. GM's overseas operations outside the United States, including China and other operations in the Asia-Pacific region, will be merged into the new GM, and its businesses will continue to operate without disruption. Gan Wenwei, President and General Manager of GM China, believes that GM's China business will continue to benefit from GM's global resources. The U.S. government is expected to divest at the latest in 2018. General Motors has been allowed to sell assets, and the major shareholder of the Obama administration is also relieved. Previously, the Obama administration frequently put pressure on the court and GM. At a court hearing last week, the Obama administration's auto task force issued an ultimatum that the government would not provide GM with financing if it did not get approval to sell assets by July 10. The U.S. Treasury Department holds 60.8% of the common stock composition of the new General Motors, the United Auto Workers Retirement Medical Trust holds 17.5%, the Canadian and Ontario governments hold 11.7%, and the old General Motors holds 10%. In addition, the old GM and the UAW Retiree Medical Trust will hold 15% and 2.5% of the new GM's exercisable warrants, respectively. The Obama administration has spent $50 billion to save GM. After GM has become a veritable state-owned enterprise, when to withdraw government investment will become a new problem. Some analysts believe that GM will be Obama's 'Vietnam War.' The U.S. government has yet to announce how it will reduce its stake in GM. Bloom, an adviser to the government's auto task force, said on June 10 that the president wants the government to divest from GM as soon as it becomes feasible. According to U.S. media reports, the U.S. government expects its own time to divest from GM no later than 2018, in line with the divestment schedule set by the Canadian government. Canada has drawn up a broad plan to reduce its GM stake, selling at least 5% of its GM stake each year, with a full divestment period of no more than eight years.