GM chief: 'Business is doing better'
In bankruptcy court testimony, Henderson says swift process is helping the troubled automaker.
NEW YORK (CNNMoney.com) -- The head of General Motors, seeking swift approval of a plan to leave the automaker's debt behind, told a bankruptcy court Tuesday that the company's June sales are stronger than expected -- in part because the bankruptcy process is going swiftly.
"Business is doing better for a number of reasons, one of which being that this process will be quick," GM (GM, Fortune 500) chief executive officer Fritz Henderson told a hearing in New York that could determine if the plan is approved.
The Detroit-based automaker, which filed for bankruptcy court protection on June 1, is trying to win approval to create a new company and shed crushing debt and expensive contracts. The company hopes to get the plan approved by Thursday -- and may get an OK as early as Tuesday.
Under the plan, U.S. taxpayers would end up owning 60% of the new GM, with other stakes held by Canadian governments, bondholders and the United Auto Workers union.
Holders of $27 billion in GM bonds would get stock in the reorganized company, as will a union-controlled trust fund that will take stock rather than the $20 billion in cash it had been owed to pay future retiree health care costs. Those 650,000 retirees will have their coverage reduced.
GM plans to close more than a dozen factories, drop U.S. brands and shut down up to 40% of its network of 6,000 dealerships.
A successful and swift move through bankruptcy is crucial to GM's restructuring and a key test of the Obama administration's efforts to rescue GM and Chrysler.
Chrysler's bankruptcy was approved on June 1, just hours before GM entered Chapter 11. An attempt by creditors to block the Chrysler bankruptcy was turned back by the U.S. Supreme Court.
On Friday, in a move that could smooth its restructuring, GM filed documents in U.S. Bankruptcy Court in New York saying that it had agreed to accept legal responsibility, post-bankruptcy, for drivers who are injured by vehicle defects in old cars.
General Motors is trying to turn itself around amid slumping auto sales and a severe recession.
In 2008, GM announced its largest-ever annual loss of $38.7 billion. The company has $27 billion in debt. In May, its stock slipped below $1 a share for the first time since the Great Depression.
Lawyers representing a variety of claims against GM -- including asbestos-related and consumer -- subjected Henderson to a barrage of questions in testimony before Judge Robert Gerber. They wanted to know why clients had been left behind in the bankruptcy process.
Henderson said the decision to leave the claims out of the bankruptcy process was concluded during negotiations with the U.S. Treasury.
This prompted Sander Esserman, a lawyer from the Dallas-based firm of Stutzman, Bromberg, Esserman & Plifka representing GM brake line mechanics, to ask, "Isn't the new GM the same as the old, without assuming old liabilites?"
Henderson denied that, saying "Our new business has a new capital structure." But Esserman noted that the offices would remain the same with the new company, along with many of the employees and possibly the leadership. 
