Old GM creditors to start mediation over disputed claims

Article by Anita Panait, on July 1, 2013

Creditors of General Motors' old assets in bankruptcy will commence holding a court-ordered mediation with a number of Wall Street hedge funds over $3 billion in disputed claims. According to court papers filed in the United States Bankruptcy Court in Manhattan, the talks will be overseen by Judge James Peck.

The dispute refers to a settlement made by the hedge funds over their investment in a GM Canadian unit on the day of the carmaker’s bankruptcy in 2009. Creditors said in court documents that the mediation has been agreed to “for the purpose of facilitating a settlement.” 

A trust filed a lawsuit against the hedge funds on behalf of creditors in March 2012 as part of the bankruptcy. The suit questions the hedge funds’ right to a cash fee of $367 million and a claim of $2.67 billion.

GM Chief Financial Officer Daniel Ammann testified in court hearings that if the dispute leads to a negative result, it could cost the carmaker up to $918 million, or 50 cents a share.

The creditors’ lawsuit alleged that while GM was readying its bankruptcy filing, the hedge funds directed events to gain a position of power that enabled them to make the claim three times the size of what they were really owed.

The lawsuit claims that the hedge funds improperly benefited themselves at the expense of general creditors. At the time, the hedge funds held two-thirds of notes in a Nova Scotia unit of GM. If general creditors invalidate the agreement they inked hours before GM filed for bankruptcy, it would wreck the entire deal that detached liabilities from the carmaker’s profitable business, which would hurt the current GM. [source: automotive news - sub. required]

Topics: gm, united states

If you liked the article, share on:

Comments

Recommended

The Nurburgring is the one track that many automakers want to hold a record of, because only the best of the best do. This time, a group of extraordinary passionate...
by - July 25, 2017
Would you like your convertible to be inspired by a yacht? Well, you do not have to imagine it anymore - thanks to the Bentley Continental GT Convertible and Mulliner...
by - July 25, 2017
The 2018 Jaguar E-Pace is the leaping cat’s first venture into the compact SUV segment, and sure enough, it didn’t take long before an artist rendered a wilder version of...
by - July 25, 2017
Good news for Audi EU5 and EU6 diesel car owners in Europe. They can now update their cars to fit six-cylinder or eight-cylinder TDI engines through a retrofit program, and...
by - July 25, 2017
Recently, Autocar revealed that a Ferrari SUV is on the way, after the company continuously denied that they will not build one. And unlike the usual crossover styling, Ferrari will...
by - July 25, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries