General Motors Corp needs to exit from bankruptcy quickly in order to avoid a “fatal” blow to many of its suppliers and the loss of thousands of jobs, Chief Executive Fritz Henderson said in a court filing.
“Many of GM's suppliers are already in the midst of a severe liquidity crisis, which has only been exacerbated by the current shutdown of certain GM production facilities,” Henderson said.
GM has shut 13 of its US assembly plants for up to 11 weeks in some cases as part of a bid to cut production and run down inventory as it reorganizes.
Henderson said tentative plans to resume operations at some GM plants by July 13 could be endangered if the court does not approve GM's sale of its best assets out of bankruptcy in a deal brokered by the Obama administration's autos task force and funded by the US Treasury.
“If ... (the) new GM is not able promptly to commence operations, many of GM's suppliers will have further draconian reductions in revenue and no income,” Henderson said.
That could force suppliers “to shut down their respective operations - perhaps permanently -and thereby (terminate) thousands of jobs.”
GM, which filed for bankruptcy on June 1, is seeking bankruptcy court approval to sell its best assets to a reorganized company funded by the US Treasury .
Judge Robert Gerber of the federal bankruptcy court in Manhattan has scheduled a June 30 hearing on the proposed sale.
Some of GM's smaller unions, including the IUE-CWA and the United Steelworkers and a group of states, including Ohio and Connecticut have filed objections to the sale.
No competing bidders have emerged as an alternative to the US government's $60 billion financing for GM, including a proposed equity investment of $50 billion that would give the US Treasury a 60% ownership stake.
At least 15 auto parts suppliers have filed for bankruptcy or had their assets seized by creditors in 2009, according to the Motor & Equipment Manufacturers Association, which represents the industry.
Those suppliers include Visteon Corp, Metaldyne Corp and Noble International Ltd.
Last week, the White House rejected a request for up to $10 billion in additional emergency funding from the auto parts industry. (Reuters)