{"id":107992,"date":"2016-07-20T08:07:45","date_gmt":"2016-07-20T12:07:45","guid":{"rendered":"http:\/\/www.thedetroitbureau.com\/?p=107992"},"modified":"2016-07-20T08:07:45","modified_gmt":"2016-07-20T12:07:45","slug":"gms-legal-problems-continue-to-grow","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2016\/07\/gms-legal-problems-continue-to-grow\/","title":{"rendered":"GM’s Legal Problems Continue to Grow"},"content":{"rendered":"
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Donald Trump's selection of Indiana Gov. Mike Pence is likely to keep GM as well as Fiat Chrysler in the news. Pence was a critic of the auto baillout.<\/figcaption><\/figure>\n

If you listen to General Motors executives, the company\u2019s 2009 bankruptcy is an event from the company’s distant history. For GM’s lawyers, however, the bankruptcy and its aftermath is still very much alive.<\/p>\n

Many of the creditors have never given up trying to recover the money they say is owed to them by what has come to be known as “Old GM,” and the trust that has liquidated assets, primarily real estate that the company abandoned, during its short trip through bankruptcy court back seven years ago.<\/p>\n

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News Now!<\/figcaption><\/figure>\n

Earlier this week, the dissatisfied creditors won the right from bankruptcy judge in Manhattan to pursue a $1.5 billion claim, stemming from the bankruptcy. <\/p>\n

Judge Martin Glenn of the U.S. Bankruptcy Court in New York said he would give the trust working on behalf of the \u201cOld\u201d GM’s unsecured creditors up to 36 months to work on the lawsuit, which the creditors against J.P. Morgan Chase & Co. and other lenders.<\/p>\n

The claim revolves around a mistake in loan paperwork. As GM was teetering on the edge of financial collapse in 2008, a $1.5 billion loan was marked as secured when it was actually an unsecured debt. Subsequently, it was paid off during bankruptcy because of the error, when in reality the bank should have had to wait in line with the other unsecured creditors for a payout from the money raised through the Old GM’s asset sales.<\/p>\n

The U.S. Court of Appeals for the Second Circuit has confirmed that J.P. Morgan loan was unsecured, and now the Old GM creditors want J.P. Morgan to return the $1.5 billion so it can be disbursed among all unsecured creditors.<\/p>\n

(\u201cNew\u201d GM scores a minor victory in court. <\/em><\/strong>Click Here<\/a><\/span><\/strong> for the story.)<\/em><\/strong><\/p>\n

At the same time, \u201cNew\u201d GM may have to turn over nearly $1 billion in company stock to a creditor trust after a federal appeals court struck down a bankruptcy shield that had protected the automaker from billions of dollars in potential ignition switch defect liability. The claimants had purchased cars with defective ignition switches from GM before the 2009 bankruptcy.<\/p>\n

The lawyers for disgruntled GM customers said during a court hearing in Manhattan that after last week’s appellate decision, which stripped GM of its bankruptcy protection that they intend to submit $10 billion in claims against the pre-bankruptcy version of GM.<\/p>\n

However, the actual payouts are unlikely to be anywhere near the $10 billion numbers as U.S. District Court Judge Jesse Furman limited what the plaintiffs can actually claim to damages involving out-of-pocket costs connected to the recalls, and they can pursue damages for the difference between what they paid for the vehicles and what they would have been worth without the alleged defect.<\/p>\n

(Appeals court deals GM major setback in ignition case. For more, <\/em>Click Here<\/a><\/span>.)<\/em><\/strong><\/p>\n

Meanwhile, GM is likely to be in the spotlight for some time in the future courtesy of the current presidential race.<\/p>\n

Donald Trump’s selection of Indiana Gov. Mike Pence as his vice presidential running mate is bound to make the GM bailout a talking point during the fall Presidential campaign in which both Trump and his Democratic opponent Hillary Clinton are scrambling for votes in the pivotal industrial Midwest.<\/p>\n

Pence, while serving as member of the Republican leadership in the U.S. House of Representatives, was an outspoken opponent of the Obama administration’s plans to bailout General Motors and what was then Chrysler Corp.<\/p>\n

(To see why GM<\/em>‘s fourth bellwether case was dismissed, <\/em>Click Here<\/a><\/span>.<\/em>)<\/em><\/strong><\/p>\n

The Indiana governor’s stance on the bailout is certain to come under fire from Democrats and Clinton as she stumps for votes in the Midwest.<\/p>\n","protected":false},"excerpt":{"rendered":"

For GM, or its legal team anyway, its 2009 bankruptcy is a never-ending battle. In the latest round, unsecured creditors scored a win! Find out what at TheDetroitBureau.com.<\/p>\n","protected":false},"author":20009,"featured_media":97504,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[8],"tags":[],"make":[],"post-state":[],"category_old":[151],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/107992"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/20009"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=107992"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/107992\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/97504"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=107992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=107992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=107992"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=107992"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=107992"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=107992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}