GM CEO makes case for bankruptcy asset sale

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New York: General Motors Corp's chief executive told a US bankruptcy court on Tuesday that the sale of GM's main assets to government-backed "New GM" must win court approval in order for the automaker to survive.

Fritz Henderson told the court that if the sale is not approved by July 10 and GM loses access to government funding, the company would be forced to liquidate. He testified on the first day of a hearing at which the automaker is seeking court approval for the sale just 30 days after filing for Chapter 11.

"Business is doing better" at GM, Henderson said, as customers, suppliers, workers and others anticipate the completion of a successful deal. He added that the automaker had originally hoped to repay its loans to the government and restructure outside of bankruptcy.

Henderson said during questioning that while sales in June were not as bad as expected, they were still down. "We do not expect to make money in June of 2009," he said.

Part of the reason business is better is the success of Chrysler's asset sale out of bankruptcy, Henderson said.

"The 363 transaction with Chrysler did go relatively quickly. It provided some buyers assurance that this can go relatively quickly," he said.

GM competitor Chrysler filed for bankruptcy on April 30 and completed a sale of its main assets a few weeks ago.

Henderson also discussed the departure of former GM CEO Rick Wagoner, saying that Wagoner told him that he had been asked to step down by Steve Rattner, head of the Obama administration's autos task force.

The GM sale hearing, before Judge Robert Gerber, is expected to continue for at least two days, as the company faces objections and questions from its creditors committee, a group of dissenting bondholders, those with liability and asbestos claims against the company, as well as unions and dealerships.

If the deal is approved, GM will be able to sell its best assets, including Chevrolet and Cadillac, under Section 363 of the bankruptcy code to a "New GM" while the US Treasury would provide billions of dollars in financing.

Evercore managing director J. Stephen Worth said during testimony that his firm valued "New GM" at $38 billion to $48 billion in an analysis the financial firm prepared for the GM board of directors. That is substantially larger than the market capitalization of Ford which is near $18.3 billion. Ford is the only US automaker to have avoided bankruptcy,