Available 24 Hours / 7 Days A Week
Call Now For A Free Consultation: (718) 329-9500
Bronx Lawyer

New York bankruptcy court to hear whether GMC’s bankruptcy agreement should be invalid

General Motors Company will soon receive a judgment on their 2009 government-led restructuring. The GM is facing the possibility of having to pay nearly $1 billion, as reported by Reuters in a January 3, 2013 Huffington Post news article.

The U.S. Bankruptcy Judge, Robert Gerber, will be deciding whether the restructure that caused a “lock-up agreement” and sent $367 million to hedge fund holders at the expense of creditors.  Upon learning of the restructure a trust was created on behalf of the creditors and a suit was filing seeking damages for the funds lost. The creditors argued that the lock-up agreement was created secretly and at the last-minute before the restructuring of the company.  Furthermore, GM’s unsecured creditors received mere pennies on the dollar while hedge fund holders received $367 million.

On the other side, GM argues that the lock-up agreement was valid and now sealed preventing the creditors from collecting those funds. They further argue that the agreement was fully disclosed in their securities filing. Now if the judge decides that the agreement was unfair, then the lock-up agreement will be void thus requiring the funds to be returned.

After hearing evidence and arguments for several days between August and October, the Judge stated that he was shocked at the lawsuit filed. In a released statement the Judge stated that he believes he will have his ruling in one month but that he believes no matter the decision it will be appealed, especially since if he nullifies the contract it would undo GM’s bankruptcy restructuring.

Call the law office of Jayson Lutzky, P.C. if you are considering filing bankruptcy. Come to our office for a free consultation to determine of bankruptcy is the right path for you. Mr. Lutzky has over 29 years of experience and is here to help  you. Call 1-800-660-5299 or visit www.MyNewYorkCityLawyer.com today.

Leave a Comment