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Reuters: GM Creditors Appeal $1.5B Fight With JP Morgan, Other Lenders

March 08, 2013, 07:59 AM
Filed Under: Bankruptcy
Related: Reuters

Reuters reports unsecured creditors of General Motors Co are appealing a defeat in a $1.5 billion fight with the company's lenders that shows the potentially drastic implications of a paperwork error.

Through an appeal lodged on March 7 in U.S. Bankruptcy Court in Manhattan, the creditor group continued a three-year fight over whether lenders, led by JPMorgan Chase & Co, should have to pay for accidentally filing a financing document that may have terminated their lien on GM's assets.

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, who have been litigating various matters in hopes of recovering money.

In this case, the creditor group claimed JPMorgan and a host of other holders of a syndicated $1.5 billion term loan may have terminated their lien on GM's assets, resulting in unsecured creditors being entitled to at least a portion of those assets.

In a March 1 opinion, Bankruptcy Judge Robert Gerber explained that, as part of a process to terminate a lien on an unrelated loan, GM and JPMorgan accidentally submitted a filing under Uniform Commercial Code guidelines whose language effectively nixed the lien for the term loan.

Gerber ultimately ruled that the lenders were entitled to the lien.

View the Reuters article.

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