Let the dismembering begin! Bankrupt General Motors last night passed another milestone on the road to restructuring when when judge Robert Gerber in a New York bankruptcy court approved the sale of substantially all of (old) General Motors Corporation’s assets to NGMCO, Inc, an entity funded by the US Department of the Treasury.

NGMCO would  now change its name to General Motors Company (aka the new GM) and continue to operate using GM’s historic corporate and sub brands.

The current (old) General Motors Corporation would change its name to Motors Liquidation Company and retained assets would be wound down or sold.

A new board of directors would oversee that process and the liquidation of the company under the supervision of the bankruptcy court.

The new GM’s common stock would  be owned by US Department of the Treasury (60.8%), UAW Retiree Medical Benefits Trust (17.5%) and Canada and Ontario governments (11.7%) and the old GM (10%).

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Additionally, the old GM and the UAW Retiree Medical Benefits Trust would hold warrants that are exercisable for 15% and 2.5% of the interests in the new GM, respectively.

“The approval marks another step toward the launch of an independent new GM,” the automaker said in a statement.

The new company would acquire GM’s strongest operations and will have a competitive operating cost structure, partly as a result of recent agreements with the United Auto Workers (UAW) and Canadian Auto Workers (CAW).

The automaker said the ‘new GM’ would have lower leverage and a stronger balance sheet which, when combined with a lower break-even point, would allow it to reduce its risk, operate profitably at much lower volume levels, and to reinvest in the business in the key areas of advanced technology and product development.

“GM’s subsidiaries outside the United States will be acquired by the new company and are expected to continue to operate without interruption,” the statement said.

The new GM would be based in Detroit and headed by president and chief executive Fritz Henderson with Edward Whitacre, Jr. as board chairman.

“A healthy domestic auto industry remains vital to the global economy and we deeply appreciate the support the US, Canadian and Ontario governments and taxpayers have given GM, and the sacrifices that have been made by so many,” said Henderson in the statement.

“This has been an especially challenging period, and we’ve had to make very difficult decisions to address some of the issues that have plagued our business for decades. Now it’s our responsibility to fix this business and place the company on a clear path to success without delay.” Henderson.

The UAW Retiree Medical Benefits Trust and the Canadian government each may nominate one member to serve on the board of the new GM. The trust chose seasoned auto industry analyst Stephen Girsky.

Also on the new board are six current members of the (old) General Motors Corporation board, including Erroll Davis, Neville Isdell, Kent Kresa, Philip Laskawy, Kathryn Marinello and Fritz Henderson.

The Canadian government representative and four additional board members to be named by the US treasury will be announced later.

Judge Gerber’s order included a four-day stay before the sale can close but GM expected this to occur “in the near future”.

“The new GM’s business is expected to be immediately operational and fully competitive, with an exciting line of new products, a smaller, more focused brand portfolio and the rationalisation of its dealer network well under way,” the statement said.

Current GM employees will be offered positions by the new company.