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

South Korean carmaker Kia will try to follow up the success of its Sportage compact sports utility vehicle by introducing a smaller SUV (subcompact) in the United Kingdom in the...
by - October 18, 2017
It can no longer be denied that Jaguar Land Rover wants to design some more hardcore type versions of their SUV range --- soon after launching the Discovery SVX only...
by - October 18, 2017
Motorists in the United Kingdom who intend to purchase the new 2018 Hyundai Kona subcompact sports utility vehicle could start placing their orders on November 2, 2017. Marked by Hyundai...
by - October 18, 2017
For many years, Lamborghini has always relied on the use of large and powerful engines including the V10 and the V12. In fact, the company’s very first engine in the...
by - October 17, 2017
You can now get the Opel Crossland X that’s LPG-powered if you are not a fan of diesel. Recently, the company released their version of the Peugeot 2008 equipped with...
by - October 17, 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