July 1, 2009

Justice objects to $17.9M GM bill

The U.S. Justice Department objected to a $17.9 million consulting fee General Motors Corp. is expected to pay when it emerges from bankruptcy.

A courtroom monitor for the Justice Department objected to the fee GM has agreed to pay Evercore Group LLC when the company sells its good assets, which could occur later this month, The Detroit News reported Wednesday.

Evercore is also charging $400,000 as a basic fee for its first month's work. GM has asked the court for permission to pay the consultant.

A month ago, GM bondholders also filed an objection to GM's arrangement with Evercore.

The U.S. Treasury Department has filed a motion, however, advocating for the company to emerge from bankruptcy as fast as possible.

A rapid emergence from bankruptcy creates the highest probability of avoiding the catastrophic and expensive meltdown in GM auto sales, Harry Wilson, a member of the Obama administration's automotive task force wrote in the filing.

Importantly, Treasury cannot make an open-ended commitment to GM that Treasury will continue to fund GM's operations if GM's critical assets languish in the bankruptcy process, the filing said.