GM Seeks Approval of $773M Environmental Accord

General Motors Co.’s bankruptcy estate seeks approval of a settlement that would set aside $773 million of U.S. money to resolve environmental claims by the federal government and 14 states, Bloomberg reported.

A mixture of cash and assets, put into trusts, would clean up and administer 89 properties, 59 of which are known to be contaminated, Gary Grindler, acting deputy attorney general, said in a statement. A 30-day period to gather public comment will precede a request for bankruptcy court approval.

More than half the money would go for sites in New York and Michigan, Grindler said.

The St. Regis Mohawk Tribe, the U.S. Environmental Protection Agency and the states are part of the settlement. The tribe has yet to accept the proposal. A public hearing is scheduled for tonight.

The accord paves the way for the carmakers’ unwanted business to wind down in bankruptcy on the eve of a hearing tomorrow at which the Old GM estate will seek court approval of terms of its liquidation.

When GM filed for bankruptcy in June 2009, it sold attractive assets to a newly formed company and left the 89 properties at issue in today’s settlement under bankruptcy protection.

The U.S. Treasury and Canada’s export credit agency had lent the bankrupt estate $1.175 billion to wind down the bankrupt properties. The EPA later filed claims in the case for environmental cleanup costs, as did the states.

Money for the settlement will come from past government loans to the automaker, said Tim Yost, a spokesman for the estate.

U.S. Bankruptcy Judge Robert Gerber in New York in May gave the company a four-month extension of time in Chapter 11 to resolve environmental and asbestos liabilities.

Two units of the carmaker formed to hold environmental liabilities owed about $1.2 billion in cleanup costs, according to court papers. The amount set aside by Old GM is the largest of recent environmental settlements.

Chrysler Corp.’s old estate in bankruptcy set aside $15 million for cleanup costs at polluted properties. Lyondell Chemical Co. resolved an estimated $5.5 billion in environmental liabilities with about $170 million, according to court papers.

Old GM’s settlement includes $641 million in cash and non- cash assets worth $120 million. It has paid $11.5 million to clean properties during its bankruptcy.