Old GM' buried with bad assets of '09 bankruptcy

For auto giant, a quiet end

December 17, 2011 By David Shepardson  Detroit News Washington Bureau

General Motors Corp., once America's largest corporation, died Thursday, Dec. 15, 2011. It was 103 years old.

                                          

In its heyday, General Motors Corp. had more than 600,000 employees and built 5 million cars a year. It was the world’s largest automaker from 1931-2008

 

Cadillacs roll down the assembly line at GM’s Clark Street plant in Detroit

The automaker faded into business history following a long and painful period, during which plants were forever closed, investors wiped out, 1,700 dealerships shuttered and tens of thousands of workers let go. The automaker was preceded in death by three of its brands: Pontiac, Hummer and Saturn. A fourth former brand, Saab, is in dire straits.

No one was there to mark the company's passing. Spokesman Tim Yost confirmed Friday that the company ceased to exist Thursday and was officially dissolved. Until The Detroit News contacted him Friday, no one had even inquired about its status.

On Friday morning, lawyers filed a court stipulation acknowledging the automaker's demise. U.S. Bankruptcy Judge Robert Gerber confirmed the company's liquidation plan in March, and set Dec. 15 as the deadline for it to go out of business.

The Detroit-based company, known in its final years as "old GM" but officially renamed Motors Liquidation Co., is survived by General Motors Co., a company born after its ancestor's 2009 bankruptcy filing, and through the inheritance of old GM's viable remaining assets and a $49.5 billion government bailout.

General Motors Corp. was born Sept. 16, 1908, in Flint, rising to become the world's largest automaker. More than 60 million of its vehicles, built before bankruptcy, are still on the road.

It was a century-long run that sparked some of the great innovations in auto engineering and styling. For decades, GM helped make Michigan one of the nation's most prosperous states.

For much of the century, old GM was the world's largest company. As recently as 1997, GM was larger than Microsoft, Intel, Dow Chemical, Boeing and Coca-Cola — combined.

Carriage maker Billy Durant founded what became the GM empire with the birth of the Buick brand. GM acquired more than 20 other companies in its early years, including Oldsmobile, Cadillac, Oakland (renamed Pontiac), Chevrolet, Vauxhall, Opel and Holden.

In 1931, GM surpassed Ford Motor Co. as the world's largest automaker, a title it held until 2008, when it was eclipsed by Toyota.

In 1955, GM had 525,000 employees in the United States and another 100,000 outside the country — and built more than 5 million vehicles. That year, its total employment was more than the combined population of Nevada and Delaware, and GM became the first U.S. business to earn $1 billion in a single year. The company was nearly twice as big as any another U.S. company.

By Thursday, old GM was down to the full-time equivalent of just two employees. Old GM's bankruptcy cost more than $120 million in legal fees and expenses. Its primary bankruptcy law firm, Weil Gotshal & Manges LLP, charged $45.2 million in legal fees and bills to guide GM to the grave. More than 400 lawyers at Weil spent 70,000 hours working on the bankruptcy.

The automaker's remaining assets are being transferred to four trusts, including one large trust that is overseeing the $800 million cleanup and sale of old GM properties. The Revitalizing Auto Communities Environmental Trust owns 65 buildings encompassing more than 40 million square feet in 14 states.

It has sold some old factories to startups like Tesla Motors and Fisker Automotive to build new EVs, but it may take years to sell the rest of the dead company's properties.

Jay Cooney, a spokesman for the new GM, said the company is looking ahead.

"Today's GM is focused on the future. We want to provide our customers with the best vehicles in the world so that we are able to continue to successfully position the company for profitable growth around the world," Cooney said.

After shedding billions of dollars in debt and cutting costs in bankruptcy, new GM is profitable. It earned $7.1 billion in the first nine months of the year, compared with a $4.7 billion profit for all of 2010.

Furthermore, including fast-growing sales of vehicles built with its Chinese partners, GM is expected this year to retake the title of world's largest automaker.

In some aspects, old GM's official demise is more symbol than substance. New GM is still using the same trademarks, email addresses and brand names.

In other ways, the end of General Motors Corp. marks a painful end.

Old GM, which had more than 1 million individual stockholders in the early 1960s, canceled its stock in bankruptcy and imposed significant cuts on pension plan recipients. GM walked away from many bills in bankruptcy and paid its bondholders only part of what they were owed.

"It's the end of an era," said David Cole, chairman emeritus of the Center for Automotive Research. His dad, Ed Cole, was a GM executive and president of Chevrolet. "But new GM is a phoenix rising from the ashes."

 

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