General Motors 2011 Annual Report Download - page 194

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Additional Modifications to Pension and Other Postretirement Plans Contingent upon the Completion of the 363 Sale
We modified the U.S. hourly pension plan, the U.S. executive retirement plan, the U.S. salaried life plan, the non-UAW hourly
retiree medical plan and the U.S. hourly life plan. These modifications became effective upon the completion of the 363 Sale. Refer to
Note 18 for description of the changes to these plans.
Accounting for the Effects of the Chapter 11 Proceedings and the 363 Sale
Chapter 11 Proceedings
ASC 852, “Reorganizations,” (ASC 852) is applicable to entities operating under Chapter 11 of the Bankruptcy Code. ASC 852
generally does not affect the application of U.S. GAAP that we and Old GM followed to prepare the consolidated financial statements,
but it does require specific disclosures for transactions and events that were directly related to the Chapter 11 Proceedings and
transactions and events that resulted from ongoing operations.
Old GM prepared its consolidated financial statements in accordance with the guidance in ASC 852 in the period June 1, 2009
through July 9, 2009. Revenues, expenses, realized gains and losses, and provisions for losses directly related to the Chapter 11
Proceedings were recorded in Reorganization gains, net. Reorganization gains, net do not constitute an element of operating loss due
to their nature and due to the requirement of ASC 852 that they be reported separately. Cash amounts provided by or used in the
Chapter 11 Proceedings are separately disclosed in the statement of cash flows.
Application of Fresh-Start Reporting
The Bankruptcy Court did not determine a reorganization value in connection with the 363 Sale. Reorganization value is defined as
the value of our assets without liabilities. In order to apply fresh-start reporting, ASC 852 requires that total postpetition liabilities and
allowed claims be in excess of reorganization value and prepetition stockholders receive less than 50.0% of our common stock. Based
on our estimated reorganization value, we determined that on July 10, 2009 both the criteria of ASC 852 were met and, as a result, we
applied fresh-start reporting.
363 Sale and Fresh-Start Reporting Adjustments
The following table summarizes Old GM’s Reorganization gains, net, arising from the 363 Sale and fresh-start reporting (dollars in
millions):
Predecessor
January 1, 2009
Through
July 9, 2009
Change in net assets resulting from the application of fresh-start reporting .............................................. $ 33,829
Fair value of New GM’s Series A Preferred Stock, common shares and warrants issued in 363 Sale .......................... 20,532
Gain from the conversion of debt owed to UST to equity ............................................................ 31,561
Gain from the conversion of debt owed to EDC to equity ............................................................ 5,964
Gain from the modification and measurement of our VEBA obligation ................................................. 7,731
Gain from the modification and measurement of other employee benefit plans ........................................... 4,585
Gain from the settlement of net liabilities retained by MLC via the 363 Sale ............................................. 25,177
Income tax benefit for release of valuation allowances and other tax adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710
Other 363 Sale adjustments ................................................................................... (21)
Total adjustments from the 363 Sale and fresh-start reporting ........................................................ 130,068
Adjustment recorded to Income tax benefit for release of valuation allowances and other tax adjustments ..................... (710)
Other losses, net (a) ......................................................................................... (1,203)
Total Reorganization gains, net ................................................................................ $128,155
192 General Motors Company 2011 Annual Report