Filed under: Government/Legal, GM, Earnings/Financials
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“New General Motors” could be unraveled by suit that angles hedge funds against general creditors that goes on trial today.
In the lawsuit, a trust for Motors Liquidation Co., better known as “Old GM,” alleges that certain hedge funds took advantage of a last-minute opportunity for a profit in the midst of the General Motors bankruptcy filing.
According to the Bloomberg report, the trust is looking to have a $367 million payment and a $2.67 claim from holders of GM Nova Scotia’s notes negated, or at the very least reduced. The trust says that the hedge funds are looking to be compensated three times more than what was owed to them by GM.
“New GM,” created in a vast series of financial maneuvers, says that the incident threatened to put a wrench in the sale of GM that allowed it to survive.
The trust claims that since the agreement with the hedge funds was reached after GM came under bankruptcy protection, the hedge fund required bankruptcy court approval - something that the trust claims the hedge fund never did.
General Motors points outs that the agreement with the hedge funds allowed it to manage inter-company loans was was essential in moving the carmaker forward. According to GM, without the agreement, the company would have been forced to liquidate immediately.
Lawsuit could unravel New GM originally appeared on Autoblog on Tue, 07 Aug 2012 15:31:00 EST. Please see our terms for use of feeds.
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