An agreement was reached on Friday to end the grueling GM lawsuit. The litigation was over GM’s secretive 2009 hedge fund deal, and General Motors has agreed to pay $50M to a trust representing a Nova Scotia unit of GM.
In 2012, the case was brought on by the trust whose mission was to fight to gain creditors more money; many felt that they were severely shortchanged by the bankruptcy. The trust attacked a deal made with hedge funds associated with John Paulson
and Paul Singer’s Elliot Management while GM was on the verge of their bankruptcy. Under the terms of the deal in question, the hedge funds received $367 million instead of the $1 billion that they were owed by the Nova Scotia unit of the company. Since some creditors received hardly anything out of the bankruptcy, the trust felt that the deal was unfair and should have been approved by the United States Bankruptcy Court before it happened.
The $50 million settlement still needs to be officially approved by the court, and the hearing is scheduled to be held in Manhattan on October 21st.
Photo courtesy of The Huffington Post