Motors Liquidation Co., a trust for creditors of General Motors Co. (GM)’s old assets, cut $2.67 billion in claims to $1.55 billion in an out-of-court agreement.
Terms of the settlement reached yesterday include the reduction of a $1.61 billion claim from Green Hunt Wedlake Inc. to $477 million, as well as a distribution of some General Motors stock to holders of debt issued by a Canadian unit in 2003, according to a filing with the U.S. Securities and Exchange Commission. The noteholders will be allowed a $1.07 billion unsecured claim.
Motors Liquidation creditors began court-ordered mediation in June with hedge funds that held the notes issued by General Motors Nova Scotia Finance Co. A trust sued the funds on behalf of creditors in March 2012, questioning their right to the $2.67 billion in claims.
The agreement requires court approval. The Nova Scotia notes at issue were 8.375 percent notes due in 2015 and 8.875 percent notes due in 2023.
General Motors Co. was raised to investment grade for the first time in eight years this week. Moody’s Investors Service upgraded Detroit-based GM to Baa3 from Ba1 on Sept. 23, citing new models for the U.S. market, strength in China and what it calculates as $31 billion of cash, including credit facilities.
The U.S. Treasury Department has reduced its stake in the automaker to 7.3 percent as part of a program to sell all of its shares within 12 to 15 months.
The main bankruptcy case is In re Motors Liquidation Co., 09-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The adversary case is Motors Liquidation Company GUC Trust v Appaloosa Investment Limited Partnership I, 12-09802, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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