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Opel could keep going even if GM seek Chapter 11

Posted on: April 19, 2009


Reuters – Friday, April 17

FRANKFURT, April 16 – The European unit of General Motors <GM.N> could still pay salaries and continue functioning even if its stricken U.S. parent files for Chapter 11 bankruptcy protection, a spokesman for Opel said on Thursday.

“GM Europe has its own pool of liquidity,” the spokesman said. It uses these funds to pay staff wages, reimburse suppliers and make investments.

Washington has given General Motors until the end of May to nail down a new restructuring plan it needs to keep getting U.S. government bailout funds.

The alternative would be for the biggest U.S. carmaker to seek protection from creditors, a step it wants to avoid.

The Opel spokesman declined to comment on a report by Germany’s Sueddeutsche Zeitung paper that Opel and GM have reached a deal that would return crucial patents to Opel in exchange for dropping claims against General Motors.

The report, which cited unidentified people familiar with the matter, said the patent deal still needs approval from the U.S. government, which got the patents as collateral against emergency loans to GM.

Opel would not automatically be cut off from GM funding even if its parent files for insolvency, a banker familiar with the matter said. This would depend on what kind of a deal is struck between Opel and GM, the banker said.

Annerose Tashiro, an insolvency expert at law firm Schultze & Braun, said payments could continue if they ultimately help pay off creditors. Payments would, however, need to be approved by an insolvency adiministrator.

“This is a cumbersome process so the money could flow more slowly than normal,” she added.

In order to prevent liquidity bottlenecks, Opel has requested loan guarantees of 3.3 billion euros from governments around Europe.

German Chancellor Angela Merkel has made the approval of any such guarantees from Germany conditional on finding an investor.

(Reporting by Angelika Gruber, Philipp Halstrick, Gernot Heller, writing by Edward Taylor; Editing by David Cowell) Keywords: GM/OPEL

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