GM Wins Final Approval of $33 Billion Government Loan

General Motors Corp. won approval to borrow the full $33.3 billion available under a bankruptcy loan from the U.S. and Canada.

U.S. Bankruptcy Judge Robert Gerber in Manhattan gave the Detroit-based automaker approval today after all the objections to the loan and its terms were resolved. Gerber previously gave GM the right to borrow $15 billion on an interim basis June 1.

GM filed for U.S. bankruptcy protection that day with a plan to create a viable business that can compete in world markets. The company reported $82.3 billion in assets and $172.8 billion in debt in its bankruptcy petition.

The ruling included a provision, requested by the U.S. government, that states the Treasury is authorized to spend money from the Troubled Asset Relief Program to make the loan.

Amy Caton, a lawyer representing the unsecured creditors committee, said the group will likely seek changes to the loan after a hearing June 30 on the sale of GM’s most profitable businesses to the Treasury. The committee wants to ensure there is enough money left to wind down the GM operations that aren’t being bought.

Adviser Fees

Gerber also approved GM’s retention of AlixPartners LLP after GM resolved an objection from the U.S. Trustee’s Office that said the advisory firm’s fees were too high. GM lawyer Stephen Karotkin said under the agreement with the U.S. Trustee, an arm of the Justice Department, AlixPartners will receive half of a proposed “success fee” related to a sale of the company’s assets on the closing date if its employees file a detailed affidavit of their services.

The remainder of the $13 million fee would be paid in a year, subject to review by Gerber and filing of time records for all the AlixPartners employees. No AlixPartners employee can bill at a higher rate than GM’s restructuring chief Al Koch, Karotkin said. Koch bills at $835 an hour, according to court papers.

The U.S. Trustee had objected to fees for both AlixPartners and another GM adviser, Evercore Group LLC, saying they were “unreasonably rich.” The Evercore retention request was adjourned to next month.

Gerber rejected a request from GM’s salaried retirees to have their own official committee in case. The group, which represents about 122,000 salaried GM retirees and their dependents, said there needed to be an official committee to negotiate with GM over pension and health-care benefits.

Pension Plan

Gerber disagreed, ruling today that GM had the right to alter the plans at any time and that prior court decisions required him to reject their request. Official committee status would have resulted in the group getting their legal and professional fees paid from GM’s bankrupt estate.

New GM intends to assume the pension plan for salaried retirees, GM lawyer Harvey Miller said. Health-care and insurance benefits will be assumed “as modified,” Miller said, and cuts are being made to those benefits.

On June 23, Gerber rejected a request by individual GM bondholders who also sought an official committee in the case.

Separately, groups with product liability and asbestos claims against GM withdrew their requests for official committees in the case. Gerber refused to appoint a “tort czar” sought by lawyers for the asbestos claimants.

The case is In re General Motors Corp., 09-50026, U.S. Bankruptcy Court, Southern District, New York (Manhattan).