GM Reorganization At Risk From Lawsuit
Case going to trial today pits general creditors against hedge funds and could undo the sale of the company
The new General Motors Co. (GM) could be undone by a lawsuit that pits general creditors against hedge funds including Appaloosa Management LP, Elliott Management Corp. and Fortress Investment Group LLC (FIG) over $3 billion, the car company said in a lawsuit that goes to trial today.
A trust for creditors of the old, bankrupt part of the auto-maker now known as Motors Liquidation Co. sued the hedge funds in Manhattan bankruptcy court in March, alleging that while GM was preparing its bankruptcy filing on June 1, 2009, the funds, which held notes in a Canadian unit of GM, "saw an eleventh-hour opportunity for profit and pounced."