Small group of GM bondholders object to sale

By Emily Chasan

NEW YORK (Reuters) - A small group of General Motors Corp GMGMQ.PK bondholders formally objected on Friday to the automaker's plans for a speedy sale of its assets in bankruptcy court, according to court documents.

The group, which calls itself the "Unofficial Committee of Family & Dissident GM Bondholders," said in court papers that it wanted the court to reject GM's proposed fast-track sale and rather pursue an accelerated bankruptcy reorganization plan that could still allow GM to emerge from bankruptcy within 60 to 90 days.

GM is proposing to do a speedy "363 sale" of its best assets, named after section 363 of the U.S. bankruptcy code, rather than come up with a typical Chapter 11 reorganization plan.

The bondholders fear that under the government-orchestrated proposed sale of GM's assets, they would not be able to participate in a speedy reorganization process.

The group said it represents the interests of more than 1,500 mainly family and noninstitutional bondholders holding more than $400 million in GM bonds, who had been unfairly excluded from the process.

GM, which filed for bankruptcy protection on June 1, is seeking court approval for a government-backed restructuring plan under which the Obama administration would take a 60 percent stake in the newly formed company made up of GM's most profitable assets.

The UAW would have a 17.5 percent stake in the new company, and the Canadian government would own about 12 percent while GM bondholders are expected to get about 10 percent.

"This 'private' deal was struck in a back room, without any transparency, without any meaningful opportunity for the bondholders represented by the (unofficial committee) to participate in the process," the group said in its objection filed in U.S. bankruptcy court in Manhattan.