GM 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 payment—and 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.)

CLICK HERE for more information on how GM's suppliers will be impacted by the Chapter 11 filing.

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