DETROIT — The United States Bankruptcy Court for the Southern District of New York has orally ruled that it would confirm the Chapter 11 Plan of Motors Liquidation Co. (MLC), the former assets of the old General Motors Corp. A written decision confirming the same ruling is expected shortly.
The Chapter 11 case of MLC is one of the largest and most complex bankruptcy cases in U.S. history and confirmation of the plan paves the way for the implementation of a unique trust structure that will continue environmental remediation, claims resolution and stock distribution to unsecured creditors.
The plan creates four trusts, one of which – the General Unsecured Creditors Trust –
will be responsible for resolving the outstanding claims of the debtors’ unsecured creditors and distributing GM’s outstanding common stock and warrants owned by MLC to those unsecured creditors whose claims are allowed. MLC presently owns 10 percent of General Motors’ common stock, plus warrants that are exercisable for a further 15 percent of General Motors’ common stock on a fully diluted basis.
MLC’s interest includes 150 million shares of common stock, a warrant to acquire 136.4 million shares at $10/share and a warrant to acquire 136.4 million shares at $18.33/share.
MLC says it successfully negotiated the resolution of nearly 85 percent of the $275 billion in claims that were filed against the company since it filed for bankruptcy in June 2009.
The corporation said it leveraged unique technological solutions provided by AlixPartners LLP in order to manage the treatment of more than 750,000 contracts, and the analysis of more than 70,000 claims. This Web-enabled collaboration considerably enhanced the efficiency and effectiveness of the process, MLC said. This was combined with extensive and collaborative negotiations for claims at numerous federal and state EPA Superfund sites.
Additionally, the Environmental Remediation Trust, or “ERT,” crafted by MLC in conjunction with federal, state and local regulators, provides $536 million for the continuing environmental remediation of remaining properties for as long as 100 years in some cases. The ERT’s assets will consist of cash, remaining unsold real properties and the equipment located at those properties.
MLC anticipates that the majority of the environmental remediation contemplated in the ERT should be completed or well underway within five years, and that the ERT will have adequate funding to bring facilities to regulatory closure.
A third trust will handle both present and future asbestos-related claims against the debtors, while a fourth trust will deal with certain litigation-related claims of the debtors.
