NEW YORK -- A bankruptcy judge on Thursday ruled that a group representing General Motors Corp.'s salaried retirees cannot form a formal committee to negotiate with the automaker as it attempts to reorganize under bankruptcy protection.
U.S. Judge Robert Gerber said that since GM had the right to modify or terminate the retirees' health care and life insurance benefits before it filed for bankruptcy protection, the retirees can't challenge the automaker's ability to do so now.
"While I do understand the importance of this to the retirees, I can't grant the retirees rights that they don't have outside of bankruptcy," Gerber said in issuing his ruling.
As part of its restructuring plan, GM plans to continue to pay health care and life insurance benefits for its 122,000 salaried retirees and their surviving spouses, but those benefits are expected to be reduced and the retirees will be forced to shoulder a larger share of their health care costs.
Retired hourly workers whose benefits are dictated by contracts with unions like the United Auto Workers are not affected.
Neil Goteiner, an attorney for the salaried retirees group, said that given what's at stake for the retirees, the cost of a committee was warranted.
"Your honor, this is truly a situation where you're dealing with widows and orphans," Goteiner said. "It's grossly unfair. They should get a chance to sit down and at least be the assistant captain of their fate."
As part of its plan to emerge from court protection, GM plans to sell the bulk of its assets to a new company that would be controlled by the U.S. government.
In exchange for up to $50 billion dollars in financing, the U.S. government will take a 60 percent ownership stake in the new company. The Canadian government would get 12.5 percent.
The United Auto Workers union will get 17.5 percent, which it will use to fund its retiree health care obligations, while GM's unsecured bondholders would own the remaining 10 percent.
Earlier in Thursday's hearing, Gerber gave GM final approval to access to its full $33.3 billion in bankruptcy financing. He had given preliminary approval earlier this month for GM to use $15 billion of the total.
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