P&A Providers & Administrators
MenuMENU
SearchSEARCH

Old GM Creditors Take on U.S. Treasury in Bankruptcy Court

October 18, 2010
3 min to read



NEW YORK - The creditors' committee for old General Motors Corp. will face off in bankruptcy court on Oct. 21 against the U.S. Treasury Department over the question of who is entitled to the fruits of $1.5 billion in lawsuits that the committee intends to bring, Bloomberg reported.


Treasury doesn't understand how there is any issue because, in its view, the government is entitled to take everything in the estate aside from stock in new GM in repayment of the loan financing the Chapter 11 case.

Ad Loading...


The bankruptcy judge at the Oct. 21 hearing will also be asked to approve the disclosure statement explaining old GM's Chapter 11 plan. Approval of the disclosure statement would enable creditors to vote.


The government admits that lawsuit proceeds aren't part of its collateral. Treasury also admits that the loan was a so-called non-recourse obligation where the government could only have the loan repaid from collateral.


Still, the government argues that it retained a so-called super-priority administrative claim that must be paid in full before the Chapter 11 plan can be confirmed. Resolution of the dispute may turn on whether the government's super-priority claim can be recovered from anything other than the collateral.


When the judge comes to consider approval of the disclosure statement, the official committee representing asbestos claimants argues that documents creating the asbestos trust must be created before claimants vote. The asbestos committee also says the disclosure statement doesn't give enough information allowing claimants to know how much they might eventually receive.


Creditors of an old GM subsidiary named General Motors Nova Scotia Finance Co. also find the disclosure statement inadequate in describing how much they're likely to recover and how. Old GM guaranteed Nova Scotia's notes. The objecting creditors include Aurelius Capital Partners LP and Appaloosa Management LP.

Ad Loading...


The loan from the government stood at $1.2 billion at the end of August. To repay the loan and fund the remainder of the liquidation, old GM at the time had $964 million cash.


Old GM, now formally named Motors Liquidation Co., has been saying that creditors will receive stock and warrants received when the core business was sold to new GM.


Old GM's operating reports have said that unsecured creditors won't receive any of the cash on hand. Old GM's liquidating Chapter 11 plan was filed in August. A trust for unsecured creditors would distribute the stock and warrants in new GM. The sale of the core business generated 10 percent of the stock of the new GM plus warrants for 15 percent. The warrants will have value if the new company is profitable enough to raise the company's value to specified levels. New GM, formally named General Motors Co. is 60.8 percent owned by the U.S. government.


Old GM began the largest manufacturing reorganization in history by filing under Chapter 11 on June 1, 2009. The sale was completed on July 10, 2009. GM listed assets of $82.3 billion against debt totaling $172.8 billion.


More Industry

Orange electric vehicle charging station.
Industry•by Lauren Lawrence•October 20, 2026

Charger Network Growth Slows

Despite a projected increase in public EV chargers in 2026, charging infrastructure remains a top concern for consumers as the gap between the most and least EV-friendly places remains substantial.

Read More →
Fan of $100 bills atop a white envelope
Industry•by Hannah Mitchell•October 13, 2026

Lenders, Consumers Take on More Auto Loan Risk

September records loosened credit access the most in over a decade as buyers took advantage of the conditions to afford trading, though loan applications fell.

Read More →
Red type R Honda civic parked on road.
Industry•by Lauren Lawrence•October 13, 2026

Next-Gen Hybrids in Sight

Dealerships can expect to see revamped hybrids from Honda next year as the company rolls out a new system and model lineup.

Read More →
Ad Loading...
Dodge ram emblem on orange vehicle exterior
Industry•by Hannah Mitchell•October 6, 2026

Gem State Stores Change Hands

A larger auto group founded in the industry’s early years sold two franchises to a neighbor group that's on a growth spurt.

Read More →
Graphic of model car driving on fake road.
Industry•by Lauren Lawrence•October 6, 2026

Charging In Motion

Honda has been researching wireless in-motion charging for electric vehicles since 2025, and new technology developments have put it a step closer to a final product.

Read More →
front grill of a Ford truck with blue Ford emblem
Industry•by Lauren Lawrence•September 30, 2026

Twin Cities Stores Sell

Minnesota-based Walser Automotive Group made what it called the most significant acquisition in its history with a three-rooftop deal in Minneapolis.

Read More →
Ad Loading...
Diesel engine on a production line in a factory
Industry•by Hannah Mitchell•September 29, 2026

U.S. Auto Sales Still Below Prepandemic Levels

Mobility Global industry observers don’t expect the market to return to the higher volumes that became routine before Covid but to stay well below its potential.

Read More →
Front of red tesla car.
Industry•by Lauren Lawrence•September 22, 2026

The Powertrain Shift

Electric-vehicle owners are backpedaling, according to new data, with product availability driving many to shift back to gas-powered engines.

Read More →
White BMW SUV driving on road.
Industry•by Hannah Mitchell•September 15, 2026

Achromatic Autos

The shades that dominate the U.S. car market don’t call attention to themselves, though grayscale may have plateaued after a 30-year upswing, research shows.

Read More →
Ad Loading...
Line of eclipse SUVs in parking lot.
Industry•by Lauren Lawrence•September 15, 2026

Used-Vehicle Affordability Worsens

Listing prices in August defied seasonal trends, rising above $27,000 for the second time this year.

Read More →