By now the bankruptcy of General Motors is mostly old news, some two years after emerging from the court-created protection, but that doesn’t mean new developments can’t still haunt the automaker beginning today.
As part of the bankruptcy process the old General Motors entity, now known as Motors Liquidation, was obligated to contribute some $625.2 million in cash to go towards the cleanup of 89 old production sites, but according to a Detroit Free Press report, it turns out General Motors may have shortchanged the trust by a sum of $13.5 million.
The charge comes from the trust, Revitalizing Auto Communities Environmental Response, or RACER, which was tasked with cleaning up the 89 sites but says that Motors Liquidation only gave the trust $49.9 million in cash, along with $575.3 million in U.S. Treasury bonds.
Some quick math will show that GM shortchanged the trust by $13.5 million, if the figures are true, and now RACER is taking GM to U.S. Bankruptcy Court in New York to get the rest of its money. Where things get tricky, however, is that the Treasury bonds’ value has increased since they were initially issued as compensation.
RACER argues that “the increased fair market value of the transferred securities has no bearing on the right of the trust to full performance by the debtors on the effective date.”
Should the court decide to side with the RACER trust, it is not clear if Motors Liquidation even has $13.5 million in remaining assets to cover the discrepancy, meaning the outcome could very well be meaningless as the new General Motors cannot be legally put on the hook for the old entity’s obligations.
References
1.’Trust says old…’ view
