- The Washington Times - Friday, July 3, 2009

General Motors Corp. reached an agreement with 30 state attorneys general Thursday to maintain the protections and rights dealers enjoy under state laws when the automaker emerges from bankruptcy, possibly next week.

The agreement, reached after days of closed-door negotiations, also requires GM to honor express warranties and state laws against defective products, pay its state tax obligations and clean up contaminated facilities that it is trying to sell off in bankruptcy.

Nebraska Attorney General Jon Bruning, who led effort to draft the agreement as president of the National Association of Attorneys General, said it shouldn’t “interfere with the ability of new GM to function as a viable company” or “add to the burden placed on taxpayers by the Treasurys purchase of GM.”

The agreement is likely to smooth the way for what GM and the Treasury hope will be a quick court approval of the sale of the automaker to the U.S government next week.

The deal comes as the judge in the GM bankruptcy case adjourned a three-day hearing without indicating when he will rule on the sale plan, according to the Associated Press in New York.

U.S. Bankruptcy Judge Robert Gerber asked GM’s attorneys to submit a proposed order that would be entered if the sale were to be approved. They said they would do so by Friday night or Saturday. Judge Gerber is expected to rule sometime after that.

A lawyer for GM warned the court that the only alternative to GM’s plan would be a liquidation of the company’s assets that would have “horrific” consequences for everyone involved.

Attorney Harvey Miller said the government is committed to cutting off funding to GM if the sale is not approved by July 10. That followed testimony Wednesday from a member of President Obama’s automotive task force who indicated the government has no plans to continue funding GM past next Friday if the sale is not approved by then.

GM’s government-backed plan for a quick exit from Chapter 11 protection hinges on the sale of most of its assets to a new entity, allowing the automaker to leave behind many of the costs and liabilities that have made it unprofitable. The Detroit carmaker’s June 1 filing for bankruptcy protection was the fourth largest in U.S. history.

Some parties objecting to the sale argued in court that the Obama administration won’t allow GM to fail.

“Essentially the objectors are asking you to play Russian roulette,” Mr. Miller told the court, adding that ignoring the deadline puts the futures of GM’s employees, retirees and creditors all at risk.

Harry Wilson, the task force member who testified Wednesday, said a quick sale is needed because the government cannot keep sinking billions in tax dollars into the company indefinitely with no guarantee of success.

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