GM could face $918 million hit from bankruptcy-related lawsuit

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Thread: GM could face $918 million hit from bankruptcy-related lawsuit

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    GMI Canada Editor Premium Member ne_one's Avatar
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    GM could face $918 million hit from bankruptcy-related lawsuit

    GM could face $918 million hit from bankruptcy-related lawsuit
    Reuters
    January 3, 2012
    by Tom Hals

    A U.S. bankruptcy judge could soon rule on whether the 2009 government-led restructuring of General Motors Co improperly favored hedge funds, and an adverse ruling could cost the automaker nearly $1 billion.

    Judge Robert Gerber must decide whether a "lock-up agreement" in the restructuring sent $367 million to a group of hedge fund noteholders at the expense of other creditors.

    A trust representing unsecured creditors has sued to undo the lock-up agreement, arguing that it was a last-minute deal secretly folded into GM's bankruptcy to ensure the hedge funds' support.

    After the automaker, or "Old GM," filed for bankruptcy in 2009, its best assets were sold to the new General Motors Co (GM.N). The remainder of the company was liquidated for the benefit of creditors.

    While the hedge funds, which hold notes with about $1 billion in face value, received the $367 million under the lock-up agreement, unsecured creditors received just pennies on the dollar. The hedge funds and other investors in the notes also received a claim against "Old GM" for $2.67 billion.

    In its lawsuit, which was filed in U.S. Bankruptcy Court in Manhattan, the creditors' trust alleged that the lock-up agreement was unfair to "Old GM" creditors. The trust said the deal took place after the bankruptcy filing and therefore required Gerber's approval, and it called on Gerber to unwind the deal.

    Full article at link.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    So this so called forced bk was not drawn up by the government but by GM?
    I didn't go to math school, so I'm not going to do the math.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Lawyers finding ways of making money for lawyers!

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    This is where investors loose out. I doubt that this goes anywhere.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Hedge funds are extremely rich people investing other richer people's money. A slue of hedge funds and other elite firms, not you or I with our brokerage account, came in buying GM bonds for pennies on the dollar just before the bankruptcy. The risk or hope in this investment was to when GM went into bankruptcy GM assets being identified and sold off by the court trusties and judge would be to pay out the owners of these bonds at a considerably higher worth than what they bought them for just weeks previous. This isn't your grandmother, you, I, nor your neighbor. These are extremely wealthy people that took a risk, when that risk didn't pay off, their cappuccinos got upset and now they're suing.

    Moreover when they were anticipating making millions off this paper shuffle, they would have paid 15% tax on tens or hundreds of millions in income, yet the man or woman trudging though a foot of snow to work their shift, six days a week is paying 25% or more of his income in taxes. I have little sympathy for the ultra exclusive hedge funds.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Quote Originally Posted by joemac View Post
    These are extremely wealthy people that took a risk, when that risk didn't pay off, their cappuccinos got upset and now they're suing.
    I read this as going the other way. These hedge funds did make their money at the expense of regular creditors (the rich got richer). The hedge funds got their position moved ahead of the regular creditors and got paid first and at 36.7 cents on the dollar compared to regular creditors that got pennies on the dollar. The WSJ had said at one point that the hedge funds had purchased most of the bonds outstanding for less than a $100 million, so the profit they made on the short-term holding was quite large.
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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Never enough for the 1%.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Quote Originally Posted by chinamonty View Post
    Lawyers finding ways of making money for lawyers!
    You go to the head of the class!
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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Quote Originally Posted by DirtyMoney View Post
    So this so called forced bk was not drawn up by the government but by GM?
    The way I read it, the BK as designed was only possible with the blessing of the hedge fund AKA money lenders, AKA money manipulators.

    This shows who pulls the strings of the Fed government, irrespective of the party in power.

    With the exit of the govt from GM, and as Wall street get more and more involved in GM (steadily rising debt) one can expect positive stories of GM to start dominating the business news to boost up their holdings.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    I wish that were the only bad news GM faces...

    http://www.sotosllp.com/class-actions/gm-dealers-claim/

    http://m.theglobeandmail.com/report-...service=mobile

    http://m.theglobeandmail.com/globe-i...service=mobile

    Remember, GM-Canada did NOT go through b/k...

    An overview of all this: http://www2.macleans.ca/2012/06/13/uncivil-law/

    With accruals and fees and such, call this one a nice round $ BILLION...

    "You reap what you sow"
    Last edited by WoodieLongRoof; 01-07-2013 at 12:48 PM.

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Oh the right wingers will love this..

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Quote Originally Posted by joemac View Post
    Hedge funds are extremely rich people investing other richer people's money. A slue of hedge funds and other elite firms, not you or I with our brokerage account, came in buying GM bonds for pennies on the dollar just before the bankruptcy. The risk or hope in this investment was to when GM went into bankruptcy GM assets being identified and sold off by the court trusties and judge would be to pay out the owners of these bonds at a considerably higher worth than what they bought them for just weeks previous. This isn't your grandmother, you, I, nor your neighbor. These are extremely wealthy people that took a risk, when that risk didn't pay off, their cappuccinos got upset and now they're suing.

    Moreover when they were anticipating making millions off this paper shuffle, they would have paid 15% tax on tens or hundreds of millions in income, yet the man or woman trudging though a foot of snow to work their shift, six days a week is paying 25% or more of his income in taxes. I have little sympathy for the ultra exclusive hedge funds.
    I have no sympathy for "ultra exclusive hedge funds," either. Your argumend is not a legal one nor a public policy one. It is schadenfreud.
    We ought not change the law because there are those who dislike the claimants. Bankruptcy courts have a substantial equity function and due consideration will be given to the issue of whether the claim is made in good faith.
    We all expect the law to be followed in matters of this kind. If the plaintiffs have a sound legal argument they may prevail. It is unfortunate that those making decisions such as this during the bankruptcy period will not be the ones to pay. If there was an error, it was not one made by GM as we know it today.
    Ed

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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    I find it laughable that you people dislike the rich people of this country who supply the funds that keep your favorite businesses running, but you love the fact that GM got a bailout from the government that it will likely never repay.

    You reap what you sow.

    Morons.
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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Quote Originally Posted by TruckMan View Post
    I find it laughable that you people dislike the rich people of this country who supply the funds that keep your favorite businesses running, but you love the fact that GM got a bailout from the government that it will likely never repay.

    You reap what you sow.

    Morons.
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    Re: GM could face $918 million hit from bankruptcy-related lawsuit

    Quote Originally Posted by TruckMan View Post
    I find it laughable that you people dislike the rich people of this country who supply the funds that keep your favorite businesses running, but you love the fact that GM got a bailout from the government that it will likely never repay.


    Indirectly, U.S. taxpayers can probably be counted among the unsecured creditors for whom the restructuring's "lock-up agreement" had a deleterious impact.
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