A federal judge said on Thursday he would approve the bankruptcy plan for Old GM, wrapping up one of the most complex Chapter 11 cases in U.S. history and paving the way for a distribution of General Motors stock and warrants to creditors.
GM filed for bankruptcy in June of 2009 and its best assets were sold to a new, stand-alone company the following month in a deal that was funded with $50 billion from the U.S. government.
The restructured automaker held a record-setting initial public offering in November, selling shares for $33 each. The company's shares closed on Thursday at $33.03, up 15 cents, or 0.46 percent, on the day.
The complicated claims left behind by GM's bankruptcy, including the question of how to deal with former bondholders and how to fund the clean-up of pollution left at its shuttered plants, had been part of the Motors Liquidation Company's Chapter 11 plan.
Judge Robert Gerber of U.S. Bankruptcy Court in Manhattan said he would approve the plan during a one-day hearing on Thursday, according to Tim Yost, a spokesman for AlixPartners.
AlixPartners is the restructuring firm that has run the wind down of Motors Liquidation.
This marks the historic completion to an incredibly complex bankruptcy, Al Koch, CEO of Motors Liquidation said in a statement.
I believe history will regard this case as the benchmark for large industrial bankruptcies in the future, especially when it comes to environmental remediation, asset liquidation and claims resolution.
Once the plan is confirmed, a trust set up under the plan can begin distributing a significant amount of stock and warrants to unsecured creditors who have filed claims against the company.
Under the plan, bondholders in the pre-bankruptcy GM and other creditors will receive a 10 percent stake in the new GM along with warrants that can be exercised for another 15 percent.
That breakdown includes 150 million shares of common stock, a warrant to acquire 136.4 million shares at $10 per share and a warrant to acquire 136.4 million shares at $18.33 per share.
Motors Liquidation Corp has resolved nearly 85 percent of the $275 billion in claims filed against the company.
That has also cleared the way for most of the GM shares to be distributed to creditors by the start of the month, analysts have said.
Before GM's IPO, many investors bought the bonds issued by the former GM as a way to speculate on the equity value of the restructured automaker.
The bankruptcy plan also includes a $536 million environmental trust for continuing environmental clean-up at former GM industrial sites.
In October, the Obama administration and 14 states struck a deal with the GM bankruptcy estate to establish a trust to clean up property at 89 closed facilities.
Fourteen states and one Indian tribe will get funds. Michigan has 56 former GM sites, the most of any state.
Other closed GM sites are in Illinois, Indiana, Kansas, Virginia, Wisconsin, New Jersey, Delaware, Massachusetts, Missouri, Pennsylvania and Louisiana.
(Reporting by Caroline Humer; editing by Andre Grenon)