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Chapter 11
GM Filing Expected 8 a.m. Monday; Koch to be Named Restructuring Chief
By JEFFREY MCCRACKEN and MIKE SPECTOR
General Motors Corp. is expected to name turnaround executive Al Koch as its new chief restructuring officer to guide the auto maker's trip through Chapter 11 bankruptcy protection, according to people familiar with the matter.
Mr. Koch, a managing director at the advisory firm AlixPartners LLP, will be named to the post when GM files its bankruptcy papers at 8 a.m. Monday at the U.S. Bankruptcy Court in New York's Southern District, these people said. He will be the highest-ranking outsider in GM's officer ranks and oversee about 60 Alix employees working for the auto maker.
A veteran turnaround specialist who worked on high-profile bankruptcies such as Kmart Corp., Mr. Koch will oversee a break-up of the company into a government-sponsored "New GM" and a remaining firm that will be left behind and liquidated.
Mr. Koch will report to GM's Chief Executive Frederick "Fritz" Henderson but will also report directly to the company's board of directors.
Assuming a New GM emerges from Chapter 11, Mr. Koch will then sit atop a new, separate management team winding down the "Old GM" that remains in bankruptcy court. In this role, he'll likely report directly to Old GM's board, which will be different from the New GM board.
As the steward of the Old GM, Mr. Koch will help negotiate contracts between the New GM and Old GM for certain services. He'll also lead efforts to spin-off or liquidate Old GM's assets, including the Saturn, Hummer, Saab and Pontiac brands, and as many as 20 factories.
Since December, Mr. Koch has been in regular meetings with GM's top management. He helped develop the auto maker's viability plans requested by the Obama administration, negotiated with the company's shareholders and lenders and readied the Chapter 11 sale of GM's "good" assets to a New GM owned largely by the government. As Alix's main adviser to GM, he also prepared an analysis outlining likely recovery by creditors in the event the auto maker liquidated.
That analysis found "no recovery for unsecured creditors," said a person familiar with the finding. The U.S. Treasury recovery would have been "significantly impaired," said this person, estimating it at less than 50 cents on the dollar.
Other top Alix managing directors on Mr. Koch's team will include Ted Stenger, who worked on Kmart and the collapse of auto-supplier Dana Automotive; Stefano Aversa, president of Alix's European operations and John Hoffecker, an auto industry specialist.
Sixty-seven year old Mr. Koch served as interim chief financial officer of Kmart when it became the largest retailer to seek Chapter 11 protection in 2002. Kmart emerged in 2003, earning Mr. Koch accolades. Kmart merged with Sears in 2005, creating Sears Holdings Corp.
In addition, Mr. Koch served as chairman and chief executive of Champion Enterprises, where he led a turnaround for that manufactured-home builder that avoided bankruptcy.
Mr. Koch "seems like a solid guy with excellent industry experience. And he works for a top firm, so … he'lll have good support," said Edward Altman, a New York University professor who focuses on bankruptcies. "Certainly Kmart was a great success in the several years subsequent to its filing, and was the darling of Wall Street in terms of when a company emerges and does well."
But Mr. Altman cautioned that the economy plays a major role in the success of corporate restructurings emerging from Chapter 11, which could work against GM.
http://online.wsj.com/article/SB124380079212769963.html?ru=yahoo#mod=yahoo_hs
By JEFFREY MCCRACKEN and MIKE SPECTOR
General Motors Corp. is expected to name turnaround executive Al Koch as its new chief restructuring officer to guide the auto maker's trip through Chapter 11 bankruptcy protection, according to people familiar with the matter.
Mr. Koch, a managing director at the advisory firm AlixPartners LLP, will be named to the post when GM files its bankruptcy papers at 8 a.m. Monday at the U.S. Bankruptcy Court in New York's Southern District, these people said. He will be the highest-ranking outsider in GM's officer ranks and oversee about 60 Alix employees working for the auto maker.
A veteran turnaround specialist who worked on high-profile bankruptcies such as Kmart Corp., Mr. Koch will oversee a break-up of the company into a government-sponsored "New GM" and a remaining firm that will be left behind and liquidated.
Mr. Koch will report to GM's Chief Executive Frederick "Fritz" Henderson but will also report directly to the company's board of directors.
Assuming a New GM emerges from Chapter 11, Mr. Koch will then sit atop a new, separate management team winding down the "Old GM" that remains in bankruptcy court. In this role, he'll likely report directly to Old GM's board, which will be different from the New GM board.
As the steward of the Old GM, Mr. Koch will help negotiate contracts between the New GM and Old GM for certain services. He'll also lead efforts to spin-off or liquidate Old GM's assets, including the Saturn, Hummer, Saab and Pontiac brands, and as many as 20 factories.
Since December, Mr. Koch has been in regular meetings with GM's top management. He helped develop the auto maker's viability plans requested by the Obama administration, negotiated with the company's shareholders and lenders and readied the Chapter 11 sale of GM's "good" assets to a New GM owned largely by the government. As Alix's main adviser to GM, he also prepared an analysis outlining likely recovery by creditors in the event the auto maker liquidated.
That analysis found "no recovery for unsecured creditors," said a person familiar with the finding. The U.S. Treasury recovery would have been "significantly impaired," said this person, estimating it at less than 50 cents on the dollar.
Other top Alix managing directors on Mr. Koch's team will include Ted Stenger, who worked on Kmart and the collapse of auto-supplier Dana Automotive; Stefano Aversa, president of Alix's European operations and John Hoffecker, an auto industry specialist.
Sixty-seven year old Mr. Koch served as interim chief financial officer of Kmart when it became the largest retailer to seek Chapter 11 protection in 2002. Kmart emerged in 2003, earning Mr. Koch accolades. Kmart merged with Sears in 2005, creating Sears Holdings Corp.
In addition, Mr. Koch served as chairman and chief executive of Champion Enterprises, where he led a turnaround for that manufactured-home builder that avoided bankruptcy.
Mr. Koch "seems like a solid guy with excellent industry experience. And he works for a top firm, so … he'lll have good support," said Edward Altman, a New York University professor who focuses on bankruptcies. "Certainly Kmart was a great success in the several years subsequent to its filing, and was the darling of Wall Street in terms of when a company emerges and does well."
But Mr. Altman cautioned that the economy plays a major role in the success of corporate restructurings emerging from Chapter 11, which could work against GM.
http://online.wsj.com/article/SB124380079212769963.html?ru=yahoo#mod=yahoo_hs
