NEW YORK – A group of General Motors Corp. bondholders and some of the automaker's labor unions filed objections Friday to the company's plan to sell its assets to a new company that can emerge from bankruptcy protection.
Their opposition, along with additional objections filed by consumer groups, a handful of states and cities, and individual retirees, shareholders and bondholders, threatens to put the brakes on what has so far been a speedy trip through the Chapter 11 process.
The Unofficial Committee of Family & Dissident GM Bondholders claim they are being treated unfairly compared with the automaker's other stakeholders and deserve more than the 10 percent stake in the new company that they would receive if the sale goes through.
In its motion, the bondholders group accused GM and the U.S. government of unjustly pushing the case through the bankruptcy process at the expense of the bondholders and dividing the new company's assets "among a few select favored classes."
"GM's bondholders appear to be the most disfavored and discriminated class in the scheme," the group wrote, pointing to the 17.5 percent stake the United Auto Workers union is slated to get under the sale.
The group claims to represent about 1,500 bondholders with holdings worth more than $400 million. It's also asking the court to grant it permission to form a formal committee that would be able to negotiate with GM separately from larger bank and investment firm bondholders. A hearing on that request is scheduled for Tuesday.
GM spokeswoman Renee Rashid-Merem declined to comment on the group's objection, saying that the company doesn't discuss specific claims or possible outcomes that will be determined by the bankruptcy court.
As part of GM's restructuring plan, the automaker wants to sell the bulk of its assets to a new company in which the U.S. government will take a 60 percent ownership stake. The Canadian government would get 12.5 percent of the new GM, with the UAW taking a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.
The support of bondholders is seen as a key step toward speeding the bankruptcy process and allowing GM to meet its goal of emerging from court oversight in 60 to 90 days.
The day before GM's June 1 bankruptcy protection filing, a group of ad hoc institutional bondholders said that 54 percent of the automaker's bondholders had agreed to exchange their shares of automaker's $27 billion in unsecured bonds for the 10 percent stake and warrants to purchase a greater stake in the new company later.
Chrysler LLC also tried to hammer out a deal in the days leading to its April 30 Chapter 11 filing, but it faced resistance from debtholders representing a fraction of its $6.9 billion in secured debt.
That group objected to Chrysler's plan to sell the bulk of its assets to Italy's Fiat Group SpA, and took the case all the way to the U.S. Supreme Court before the sale ultimately went through. Attorneys for consumer groups and people with product liability lawsuits against Chrysler also appealed the sale to the high court.
Meanwhile, the IUE-CWA, United Steelworkers and International Union of Operating Engineers claimed Friday that the GM sale will ultimately take away the health care benefits of their 50,000 retirees.
Before it filed for bankruptcy protection, GM reached a deal to give the UAW a stake in the new company to help fund retiree heath care benefits, but no such agreement has been reached with the other unions.
"If GM succeeds in leaving behind these union-represented retirees and dependents, they will be left with only an unsecured claim against old GM for more than $3 billion in retiree health care and hundreds of millions more for retirement life insurance," the unions said in their objection.
Rashid-Merem said discussions related to the non-UAW health care benefits are ongoing, and the company hopes to reach final decisions about their future soon.
A hearing on the sale of GM's assets to the new government-led entity is scheduled for June 30.