Bankruptcy alters General Motors' liability

Bankruptcy forever changed General Motors Corp. and gave new urgency to its downsizing. It also affected the firm's financial responsibility for cleanup costs at automotive brownfields slated for redevelopment.

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With the bankruptcy, two companies were created. General Motors Co. is a new company legally independent of the bankrupt firm, while “Old GM” became Motors Liquidation Co. Both are based at the Renaissance Center in Detroit.

Motors Liquidation will auction or sell 200 former GM properties, including 15 factories, and will eventually be phased out, says Tim Yost, a spokesman for AlixPartners, based in Southfield, Mich. AlixPartners is providing restructuring services to Motors Liquidation.

Investors may find attractive deals, since GM is in a hurry to sell. Legally, companies can only stay in bankruptcy for 18 months, explains Yost. “So, we're a very motivated seller.”

“New GM” jettisoned all but a couple of idled plants. It kept a 3.6 million sq. ft. Doraville, Ga. plant on 165 acres near an Atlanta subway station, says General Motors Co. spokesman Dan Flores.

Opened in 1947, the plant churned out Chevys, Pontiacs and Buick minivans before closing in 2008. “When the time is right and the offer is right, we would be willing to look at selling,” says Flores.

New GM also is hanging on to a 97-acre plant in Sleepy Hollow, N.Y. Located 30 miles north of New York City on the Hudson River, the potential developed value is astronomical. “In that part of the country there is not a lot of available real estate, especially on the banks of the Hudson,” says Flores. But getting to completion has proved elusive.

For years, New Jersey-based developer Roseland Property Co. worked with local officials on a $1.7 billion mixed-use development plan for the site vacated in 1996.

But in 2008, Roseland finally called it quits, citing the weak economy and opponents' long fight for open space at the site. Today, the cleared land looks like an uneven concrete checkerboard where old assembly buildings once stood. Chain link fences sag and weeds poke through.

In 2007, the New York Department of Environmental Conservation outlined steps necessary to clean soil “grossly contaminated” with lead, chromium and trichloroethene. GM stepped up and undertook the cleanup. But in 2009 bankruptcy allowed the new company to remove itself from liability for pollution costs at other sites. “General Motors Co., the new company launched July 10 via the Chapter 11 bankruptcy, has no legal obligation to any of the remediation for the surplus properties that remained in the old company,” says Flores.


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