July 3, 2009

Government bluffing, bondholders say

An attorney representing General Motors Corp. bondholders told U.S. Bankruptcy Court Judge Robert Gerber the government was bluffing with a July 10 deadline.

Representing the U.S. Treasury, Harry Wilson had told the judge that GM needed to complete a sale of its good assets by July 10 or the government would back away from its $30 billion commitment to purchase 61 percent of the company.

But attorney Michael Richman said the government had made a conscious, strategic decision, to avoid a traditional reorganization of the company, which was an awesome gamble, The Washington Post reported Friday.

After bailing out GM earlier this year with billions of dollars, the government's claim that it would walk away from the deal now was not credible, Richman said.

GM's attorney Harvey Miller said the critical issue was a quick sale of GM to protect its customer base.

With a delayed bankruptcy proceeding, essentially, the objectors are asking you to play Russian roulette, Miller said.

The judge closed the hearing on the sale of GM's assets but did not indicate when he would make a decision on the matter, the newspaper said.