New York Judge Leery of GM Bankruptcy Appeal

(CN) - In the General Motors bankruptcy case, a federal judge in Manhattan rejected an objection from an Ad Hoc Committee of Asbestos Personal Injury Claimants, saying he is not convinced that the group "established the threat of irreparable injury(;) it represents unsecured creditors."

But U.S. District Judge Lewis Kaplan ruled Thursday that "although there is a significant possibility that the appeal will be mooted by the consummation of the sale, there is no reason not to provide for an expedited appeal should the Committee elect to pursue it." He gave them until July 14.

"No sentient American is unaware of the travails of the automobile industry in general and of General Motors Corporation in particular," Judge Kaplan wrote. "As the Bankruptcy Court found [on July 5], GM will be forced to liquidate - with appalling consequences for its creditors, its employees, and our nation - unless the proposed sale of its core assets to a newly constituted purchaser is swiftly consummated."

Under Bankruptcy Judge Robert Gerber's July 5 order, "the entry of even a brief stay would constitute an event of default and provide the DIP (debtor in possession) lender the right to refuse financing," Kaplan wrote.

Kaplan added: "(T)his case evokes the old adage that one ought to be careful of what one wished. I say that because there is every reason to believe that the individuals the Committee represents would be worse off, and certainly not better off, if it were to obtain a stay than if a stay were denied. Nevertheless, there is a risk that the Committee's appeal would be mooted by consummation of the sale. Accordingly, I assume, dubitante, that it has established a modest threat of irreparable injury. But that is the high water mark of its application."

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