Attempts to Answer Suppliers' Questions Amidst Chapter 11 Filing;
Top Questions are Payment, and Who Will Work with New GM
June 2, 2009
General Motors (GM) Corp. is attempting to answer suppliers' questions
in the wake of its bankruptcy filing yesterday and the announcement
that the company is seeking a 363 assets sale to a newly formed
company, the New GM. The top question among suppliers likely is
about paymentand when/how payments will be made.
Though GM has not yet provided a list of critical providers, the
company says it is in the process of seeking the court's approval
to pay the prepetition claims of "certain of our suppliers
that provide materials, supplies, services and other items that
are essential to GM's business."
For parts provided after the time of the bankruptcy filing, "GM
will pay for all goods shipped or services provided post-filing
in the ordinary course of business."
GM notes that an "automatic stay" went into effect upon
GM's June 1 filing, and this requires all suppliers to continue
to work with GM "in accordance with their contracts, including
continuing to ship today and throughout the bankruptcy case to GM."
"GM will enforce the automatic stay with respect to any suppliers
that wrongly refuse to comply with the terms of their contracts,"
say GM officials.
For those suppliers seeking to have their "pre-petition claims"
paid, will need to be authorized by the U.S. Bankruptcy Court and
"will be conditioned upon the supplier agreeing to continue
to provide goods and services pursuant to the terms of a 'Trade
Agreement.'" The Trade Agreement had not yet been filed with
the court at press time.
Once the court approves GM's "form of notice," the company
will be notifying suppliers that it intends to retain with the New
GM; these suppliers' pre-petition claims will be paid "as soon
as practicable following the closing of the sale, which is expected
to take 60 to 90 days," say GM officials.
GM has set up a hotline for suppliers with questions to call. The
number is 888/409-2328 (U.S.) or 586/947-3000 (international).
The company has not yet filed a list of suppliers and their cure
amounts with the court. Chrysler, whose partnership with Fiat was
approved by the courts yesterday, issued its own list of suppliers
it intends to retain a few weeks ago. Both Guardian Industries and
Pittsburgh Glass Works, both of which will be retained in the transition,
topped the list. (CLICK
HERE for related story.)
HERE for more information on how GM's suppliers will be impacted
by the Chapter 11 filing.
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