GM could face nearly $1.22b hit from bankruptcy-related lawsuit
(REUTERS) - A United States (US) bankruptcy judge could soon rule on whether the 2009 government-led restructuring of General Motors Co (GM) improperly favoured hedge funds, and an adverse ruling could cost the automaker nearly US$1 billion (S$1.22 billion).
Judge Robert Gerber must decide whether a "lock-up agreement" in the restructuring sent US$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. The remainder of the company was liquidated for the benefit of creditors.