GM close to bankruptcy exit, sale to government (1st Lead)

Jul 9, 2009, 16:04 GMT

New York - US carmaker General Motors could exit bankruptcy and come under the control of the US government by the end of this week, as a Thursday deadline for challenges was set to expire.

A New York judge on Monday approved GM's plan to sell its best assets into a new company that would be majority owned by the US Treasury. Judge Robert Gerber set a deadline of Thursday at noon (1600 GMT) for opponents to appeal the sale.

President Barack Obama's administration has set its own ultimatum of Friday for the sale to go through, threatening to otherwise pull 30 billion dollars in funding.

The Treasury would get a 60-per-cent stake in a post-bankruptcy GM in exchange for the loans. The Canadian government, which has also provided billions of dollars, will get 12 per cent.

GM's reorganization plan has been challenged by some bondholders, dealerships, unions and accident victims that want the new GM to remain liable for their claims. But all have so far been blocked by Judge Gerber.

The Obama administration was also mulling what kind of pension to give ousted GM chief executive Rick Wagoner, who was forced out in March as part of the government's massive bail-out of the troubled manufacturer.

Wagoner is retained on a nominal one-dollar-a-year salary, but now Washington must decide what sort of exit package to offer the 56- year-old former boss.

Some media reports put the figure Wagoner is contractually entitled to at up to 20 million dollars, making it a tricky political decision for an administration hit by a public outcry at handouts of taxpayers' dollars.

No decision has yet been made on his package, according to Treasury officials. Obama has in the past expressed outrage over bonuses and excessive payments to the managers of failing businesses in the current economic crisis.