NEW YORK -(Dow Jones)- General Motors Corp. (GM) will ask a bankruptcy judge Monday for permission to tap about half the $33 billion in bankruptcy financing being provided by the U.S. and Canadian governments.
Harvey Miller, an attorney for the auto maker, said at a court hearing that GM has just $2 billion in cash and that it has an “urgent” need to access the government loan.
The $33 billion in aid from the U.S. and Canada is intended to support GM during what it hopes will be a quick trip through bankruptcy. It plans to sell the bulk of its assets to a new company controlled by the U.S.
GM was in court Monday afternoon for the first time since filing for bankruptcy to ask Judge Robert Gerber of the U.S. Bankruptcy Court in Manhattan to approve routine requests, known as first-day motions, intended to allow it to continue operating.
Gerber approved GM’s request to make payments to troubled “critical” parts makers while in bankruptcy through a U.S. Treasury program for troubled parts makers and its own supplier-aid initiative.
The auto maker feared a collapse of any of its core suppliers would lead to a costly work stoppage. Top-tier suppliers Visteon Corp. (VSTN) and Metaldyne Corp. filed for bankruptcy protection recently amid turmoil in the U.S. auto industry. GM’s main supplier, Delphi Corp. (DPHIQ), has been in bankruptcy for almost four years.
Separately, the U.S. Trustee’s office, an arm of the Justice Department that monitors bankruptcy proceedings, announced at Monday’s hearing that GM’s unsecured creditors are scheduled to meet Wednesday at 10 a.m. EDT in New York. At that meeting, a committee will be formed to represent the creditors during the bankruptcy case.
The bankruptcy loan requires GM to win court approval for the sale of its assets by July 10. The financing comes on top of about $20 billion in loans provided to the auto maker by the U.S. Treasury Department.
The auto maker’s cash levels are now well below the amount it would need to operate on its own. Without the $20 billion in U.S. government loans GM received, the picture would be far worse.
GM had more than $24 billion in liquidity at the end of the first quarter a year ago, as the company’s non-U.S. operations helped offset multi-billion dollar losses in North America. At the end of March, GM had $11.6 billion in liquidity that was largely offset by federal loans.
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