A lawsuit that pits hedge funds against creditors is going to trial today, and the outcome could threaten to unravel "New General Motors."

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.



I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 24 Comments
      Willie
      • 2 Years Ago
      That's a great picture of the Renaissance Center.
      3 lock box
      • 2 Years Ago
      Let it die, not because the produce a bad product, but because of their ridiculous and political connection to the auto Unions!!!!!!!!!!!!!!!!!!!!! I've bought American up until my current ride, but just can't go there anymore given what I see as a scam and racket the unions have become at the expense to the rest of the country!
        Flat10
        • 2 Years Ago
        @3 lock box
        Amen brother, the Unions are not your friends here in the US!!!
      CEC
      • 2 Years Ago
      I hate to say it, especailly with the large profits that GM is pulling in, but they still apear to be a huge unorganized mess.
        rlog100
        • 2 Years Ago
        @CEC
        This is a claim against transactions carried out 3 years ago that has been out of "New GM's" involvement since that time. I don't understand the connection you made other than to bitch.
          BG
          • 2 Years Ago
          @rlog100
          This does not make sense. How is this related to what CEC wrote above? He said GM still looks like an unorganized mess.
        Jerry
        • 2 Years Ago
        @CEC
        Amen
      MyerShift
      • 2 Years Ago
      Why aren't people bitching about Wall Street's bail out? That was far, far worse.
        brandon
        • 2 Years Ago
        @MyerShift
        Ummm, they are. But this is any AUTO site. So what do you really expect?
        Nick
        • 2 Years Ago
        @MyerShift
        What the hell are you talking about? MANY people opposed the bailouts for banks and for GM. It's actually one of the few things that both OWS and the Tea Party agree on. Few Americans supported Wall street and auto industry bailouts. I certainly didn't support giving money to failed banks and auto companies.
      • 2 Years Ago
      [blocked]
      KAG
      • 2 Years Ago
      New name same people running it, what do they except.
      • 2 Years Ago
      [blocked]
      Avinash Machado
      • 2 Years Ago
      The bad news about GM never ends.
      brandon
      • 2 Years Ago
      I say we just dismantle GM, and sell it off, then watch a great company rise from the ashes.
      moderate fringe
      • 2 Years Ago
      People that had GM in there retirement funds got the shaft. Never hear about this. Maybe 1 or 2% of the total but the unions made out fine. Same GM featuring most overpriced vehicles. They sell like hotcakes yet the unions/management will be back soon blaming imports for their bad business model despite new 65k Yukons being everywhere.
      Xedicon
      • 2 Years Ago
      That opening sentence needs to go back to eighth grade grammar... wow.
      Basil Exposition
      • 2 Years Ago
      That's a bit of a Drama Queen title
    • Load More Comments