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Worthless Husk of General Motors Has $500 Million Market Capitalization

Strange-but-true tale of General Motor’ afterlife from Bernard Simon of the Financial Times:

The old General Motors died in a US bankruptcy court last summer. But its shares remain very much alive. So alive that as the rest of Wall Street took its biggest tumble of the year on Friday, shares of the old GM, now known as Motors Liquidation Company , gained another 3 per cent, giving the legacy company a market value of close to $500m (£306m).

In spite of repeated warnings from the restructured GM, the Securities and Exchange Commission and others that the shares are worthless, Motors Liquidation has surged from 47 cents at the start of the year to 77 cents on Friday. Someone has made a tidy killing.

Motors Liquidation, which remains in Chapter 11 bankruptcy protection, holds about 200 properties and more than 500,000 contracts abandoned by GM during its court-supervised restructuring. The winding down is expected to take several years, and liabilities are sure to dwarf whatever is raised from asset sales. “It’s been a challenge to get through to people that these are not shares in the new company,” GM said. The Motors Liquidation name was adopted as part of the effort to distinguish the old and new GMs.

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I assume this’ll come crashing down to something closer to $0 soon enough.