Old GM Chapter 11 Plan Consummated
The ongoing legal proceedings connected with the bankruptcy of the old General Motors took another step last week as the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the second amended joint Chapter 11 Plan of Motors Liquidation Co.
Officials indicated the confirmation also stipulates all the conditions to the effectiveness of the plan were met or waived, making the plan effective. They reiterated MLC’s Chapter 11 case is one of the largest and most complex bankruptcy cases in U.S. history and the effectiveness 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.”
Also included in the confirmation ruling were:
—MLC of Harlem, formerly known as Chevrolet-Saturn of Harlem.
—MLCS, formerly known as Saturn.
—MLCS Distribution Corp., formerly known as Saturn Distribution Corp.
—Remediation and Liability Management Co.
—Environmental Corporate Remediation Co.
“Consummation of the plan is a testament to the fact that creative approaches to old challenges coupled with a dedicated team working closely with federal and local governments, regulatory bodies, communities and creditors, can create unique solutions in a relatively short period of time,” explained Al Koch, chief executive officer of MLC.
“This marks the historic completion to an incredibly complex bankruptcy and I believe history will regard this case as the benchmark for large industrial bankruptcies in the future, especially when it comes to environmental remediation, asset liquidation and claims resolution,” Koch continued.
Officials went on to highlight the plan creates four trusts.
The GUC Trust is designed to be responsible for resolving the outstanding claims of the debtors’ unsecured creditors and distributing the GM outstanding common stock and warrants owned by MLC to those unsecured creditors whose claims are allowed. Documents say MLC presently owns 10 percent of GM’s common stock, plus warrants that are exercisable for a further 15 percent of GM’s common stock on a fully diluted basis.
Officials also mentioned MLC’s interest includes 150 million shares of common stock, a warrant to acquire 136.4 million shares at $10 per share and a warrant to acquire 136.4 million shares at $18.33 per share.
Legal experts insisted claims resolution was a key focus for MLC. They pointed out MLC 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.
Officials went on to stress MLC leveraged unique technological solutions provided by AlixPartners 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 stated. “This was combined with extensive and collaborative negotiations for claims at numerous federal and state EPA Superfund sites.”
Additionally, officials explained the Environmental Response Trust crafted by MLC in conjunction with federal, state and local regulators, provides $536 million (subject to certain adjustments) for the continuing environmental remediation of remaining properties, for as long as 100 years in some cases. They noted the ERT’s assets will consist of cash, remaining unsold real properties and the equipment that is located at those properties.
“The ERT is a unique structure as compared to the traditional large environmental bankruptcy in that it provides an overall ‘national’ remediation solution backed by significant funds, while also providing a strong voice to the states involved in the process,” said Ted Stenger, executive vice president of MLC.
“It is nearly impossible to redevelop such properties for productive, job-creating purposes unless environmental remediation is complete or the buyer can be assured the funding exists,” Stenger added. “The plan provides this assurance and has contributed to the sale or agreement to sell more than a dozen MLC properties.”
MLC anticipates that the majority of the environmental remediation contemplated in the ERT should be completed or well under way within five years, and that the ERT will have adequate funding to bring facilities to regulatory closure.
Officials went on to note 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.
MLC also pointed out an additional significant accomplishment has been the aggressive real estate sales during the bankruptcy process.
“Although environmental remediation has been a need at many of the sites under MLC’s control, MLC’s asset-sales team, working closely with federal and state governments and local communities, has been able to recently sell or secure sales agreements,” officials highlighted.
These agreements for 11 properties include:
—Pittsburgh Stamping.
—Moraine (Ohio) Assembly.
—Grand Rapids (Mich.) Stamping.
—Parma (Ohio) complex and land.
—Pontiac (Mich.) Assembly.
—Pontiac Centerpoint Central.
—Pontiac Centerpoint West.
—Pontiac Site 15.
—Pontiac Site 17.
—Pontiac Site 25.
—Pontiac building
These new sales are in addition to previously announced sales at facilities such as:
—Wilmington (Del.) Assembly, sold to Fisker Automotive Inc. for the production of hybrid electric cars.
—Pontiac (Mich.) Centerpoint Campus, sold to Raleigh Studios Inc. for the creation of a movie studio supporting Michigan’s film industry.
—Strasbourg (France) Powertrain, sold to GM and saving approximately 1,200 jobs.