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Bailout on the Brink: Judge Set to Rule on Case that Could Reverse Auto Bailout [General Motors]
freebeacon.com ^ | December 6, 2012 | Bill McMorris

Posted on 12/06/2012 3:13:02 PM PST by grundle

A New York federal judge may rule imminently on a case that could reverse the General Motors (GM) bailout and send the company back into bankruptcy, according to sources close to the case.

At issue is a backroom deal hatched by GM to fulfill the Obama administration’s demand for a quick bankruptcy, draining the automaker of nearly all of its cash on hand and leaving it in worse shape than it was when it collapsed in 2009.

One condition of GM’s bailout was to shore up its overseas subsidiaries. On the eve of entering bankruptcy, the company cut a $367 million “lock-up agreement” with several major hedge funds to prevent GM Canada from failing. The agreement ensured that GM could spin-off its liabilities to “old GM,” while using a multi-billion dollar bailout to create a new company.

All of that could be reversed if bankruptcy Judge Robert Gerber reopens the process and rules in favor of old GM trustees, who are suing the hedge funds at the center of the lockout agreement.

“In this particular situation, there’s $1.3 billion in liabilities, but that’s just what’s officially back on the table if the court rules for old GM,” said a bankruptcy expert close to the negotiations. “If those go back on the table then everything could be back on the table and [new GM] would have to address them.”

Those liabilities, which include old GM’s debt and product liabilities that pre-date bankruptcy, are valued at $30 billion, a sum that would wipe out the company’s $34.6 billion cash reserves.

Negotiators representing both sides of the case met in New York on Thursday to try to settle the suit through mediation rather than a court order.

“They’re feeling pretty good about it,” said an industry insider who spoke to one of the hedge fund negotiators on Thursday.

Gerber, the federal judge who initially approved the sale with little hesitation, now has the power to reverse the entire auto bailout. He has expressed deep frustration with the company for failing to disclose the deal, leading some to speculate that he may overturn one of President Barack Obama’s signature achievements.

“When I approved the sale agreement and entered the sale approval order I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs. It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all,” Gerber said in July.

“The judge has made it very clear that he is greatly dissatisfied with the process,” one analyst told the Washington Free Beacon in October. “He’s basically implying that GM hid it from him and that reopening the sale is a possibility.”

If Gerber takes that course the company could be forced to return the $30 billion taxpayer bailout that it received through the course of bankruptcy, on top of the new liabilities.

“It’s nice to see that GM is profitable again, but if all the liabilities come back to roost, short that stock,” the bankruptcy expert said.

A GM spokesman declined comment since the litigation is pending.

The Canadian and American governments played vital roles in the deal and pushed GM to negotiate as quickly as possible.

“Officials from the U.S. and Canada were very much involved—they were in the building when the deal was being negotiated,” an insider familiar with the deal said in October.

The Treasury Department, which oversaw the auto bailout, did not return emails for comment.

The company is taking the possibility of a negative ruling from Gerber very seriously. GM attorneys filed court documents saying that the lawsuit “could create a chaotic situation for GM Canada, spawn new litigation in other forums, and potentially provide a windfall to the noteholders.”

The bankruptcy expert said if the two sides cannot come to an agreement on Thursday, Gerber could preside over one of the most historic rulings in bankruptcy court history.

“This has tremendous implications for future of American business and bankruptcy precedent,” he said. “It means more than just GM—this is the rule of law and how creditors are treated in the United States legal system.”


TOPICS: Crime/Corruption; Extended News; Miscellaneous; News/Current Events; US: District of Columbia; US: Illinois; US: Michigan; US: New York; US: Ohio; US: Wisconsin
KEYWORDS: canada; districtofcolumbia; generalmotors; gm; governmentmotors; illinois; michigan; newyork; ohio; wisconsin

1 posted on 12/06/2012 3:13:08 PM PST by grundle
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To: grundle
"Gerber, the federal judge who initially approved the sale with little hesitation, now has the power to reverse the entire auto bailout. He has expressed deep frustration with the company for failing to disclose the deal, leading some to speculate that he may overturn one of President Barack Obama’s signature achievements."

It would take a man of integrity to admit he screwed up, accused obama of hustling him and reverse his decision.

2 posted on 12/06/2012 3:21:21 PM PST by knarf (I say things that are true ... I have no proof ... but they're truePRIMO !!)
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To: grundle

The GM bailout was so unspeakably corrupt that I am boycotting that company and its successors (whether named “New GM” or otherwise) forever. If they go back, do it honestly, and make the bondholders and others who were stiffed the first time around whole, I will reconsider. I doubt that those who were ripped off in violation of contract law, bankruptcy law, and common law are holding their breath in anticipation of justice, not with a corrupt communist in our White House.


3 posted on 12/06/2012 3:21:35 PM PST by Pollster1 (Freedom is never more than one generation away from extinction. - Ronald Reagan)
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To: grundle

Somebody representing the union administration will pay a visit to this judge in the middle of the night and convince him to rule in a way that won’t harm him and his family’s health.


4 posted on 12/06/2012 3:22:10 PM PST by capydick (''Life's tough.......it's even tougher if you're stupid.'')
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To: Pollster1

No GM for me either. I won’t reconsider however. They won’t miss my business.


5 posted on 12/06/2012 3:27:19 PM PST by ImJustAnotherOkie (zerogottago)
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To: capydick

Exactly. A similar offer to the one John Roberts couldn’t refuse.


6 posted on 12/06/2012 3:27:26 PM PST by Aria ( 2008 & 2012 weren't elections - both were a coup d'etat.)
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To: grundle

Please Judge Gerber, just do it! The whole GM “bankruptcy” was a sham. Screwed Republican-owned dealerships, hosed those who were shareholders and bond holders, Forced management to resign, and handed the company over to the UAW. Just hope that the judge is really pissed off about being lied to.


7 posted on 12/06/2012 3:30:53 PM PST by vette6387
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To: Pollster1
Were all the Dealership closings involved in this? If so, how would they make them whole?
8 posted on 12/06/2012 3:31:47 PM PST by annieokie
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To: grundle; knarf; zot

Al Quaeda is alive and GM is Dead!


9 posted on 12/06/2012 3:32:59 PM PST by GreyFriar (Spearhead - 3rd Armored Division 75-78 & 83-87)
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To: grundle

Here is a better explanation of the deal they cut.

http://www.detroitnews.com/article/20120927/AUTO0103/209270473


10 posted on 12/06/2012 3:36:16 PM PST by crosslink (Moderates should play in the middle of a busy street)
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To: grundle
'The company is taking the possibility of a negative ruling from Gerber very seriously. GM attorneys filed court documents saying that the lawsuit “could create a chaotic situation for GM Canada, spawn new litigation in other forums, and potentially provide a windfall to the noteholders.”'

So now it's considered a "windfall" when one makes a loan or investment, secured by a "NOTE."

Bernard Madoff swindled people out of billions of dollars. Sentenced to 150 years in prison.

Barack 0bama swindled America out of $6 trillion. Sentenced to 4 more years as Warden.

0bama: Fake black (Mulatto) man. Fake Messiah. Fake American. How many fakes can you fit in one Zer0? “C0mmander Zer0.”

Next they will be saying just what a smart guy Johnny ("I simply do not know where the money is, or why the accounts have not been reconciled to date.") Corzine is.

John Corzine, a Democrat, and 1 year, and seven month's (or just 19 months), from March 2010, to October 2011, was CEO of MF Global Inc., The company filed for bankruptcy protection in October 2011. Certified Smart Guy.

11 posted on 12/06/2012 3:37:58 PM PST by Stanwood_Dave ("Testilying." Cop's don't lie, they just Testily{ing} as taught in their respected Police Academy.)
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To: grundle; Pollster1; Mark Modica
Here's an interesting piece on the bailout.

Obama’s GM Bailout Nothing to Brag About

12 posted on 12/06/2012 3:41:40 PM PST by jazusamo ("Intellect is not wisdom" -- Thomas Sowell)
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To: grundle
“It’s nice to see that GM is profitable again...

Profitable because 'Rat-infested town govts, 'Rat-infested city govts, 'Rat-infested state govts, and 'Rat-infested national govt are typically buying cars from Government Motors.

[I call it the "national" govt because it likes to "nationalize" whole industries]

13 posted on 12/06/2012 3:46:04 PM PST by C210N (In favor of private rights and public happiness)
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To: ImJustAnotherOkie

No GM or Chrysler...in my driveway.....
.... sure hope the fellows at Ford don’t do anything foolish....


14 posted on 12/06/2012 3:50:47 PM PST by ptsal (E)
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To: grundle

bkmk


15 posted on 12/06/2012 3:51:44 PM PST by Sergio (An object at rest cannot be stopped! - The Evil Midnight Bomber What Bombs at Midnight)
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To: grundle

...see how long the Volt last, GM loses over $48,000 making Obama’s car. They should have called it the Dolt!


16 posted on 12/06/2012 3:53:33 PM PST by Doogle
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To: ImJustAnotherOkie

I have a 2K3 Silverado now that is 10 years old. I will never buy another GM product. They were pretty dishonest during the whole bailout process.


17 posted on 12/06/2012 3:58:38 PM PST by reader25
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To: ImJustAnotherOkie

I have a 2K3 Silverado now that is 10 years old. I will never buy another GM product. They were pretty dishonest during the whole bailout process.


18 posted on 12/06/2012 3:59:02 PM PST by reader25
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To: capydick

Probably will find a horse head in his bed one morning. Or he could end up like Hoffa if he makes the UAW mad.


19 posted on 12/06/2012 4:04:20 PM PST by reader25
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To: C210N
Hey Cessna Driver, yes I know what a 210 is :-)...

Go the Zero Hedge the other day.

GM is "Stuffing the Pipe" Again...

http://www.zerohedge.com/news/2012-12-03/gm-channel-stuffing-wtf

20 posted on 12/06/2012 4:05:57 PM PST by taildragger (( Tighten the 5 point harness and brace for Impact Freepers, ya know it's coming..... ))
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To: grundle
While Obama and Boehner spar, look what is going on in Michigan...

* Right to Work is about to Pass in Michigan.
* Detroit heavily Unionized and unwilling to change just might go bankrupt as Gov. Snyder is loosing patience and may let them go....
* And GM may finally have to go through a real bankruptcy, not something engineering by Obama that took Contract Law back 800 years.

That is a lot of history in a very short time frame....

21 posted on 12/06/2012 4:10:33 PM PST by taildragger (( Tighten the 5 point harness and brace for Impact Freepers, ya know it's coming..... ))
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To: grundle

I would love to see that happen. Will the bondholders get their money?


22 posted on 12/06/2012 4:16:30 PM PST by SoFloFreeper
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To: grundle
oh God, please oh please oh please oh please oh please let it come to pass...
23 posted on 12/06/2012 4:35:03 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: Stanwood_Dave

My thoughts exactly. Since when is a lawful return of capital a “windfall”....only in current day Obamaland.


24 posted on 12/06/2012 5:20:40 PM PST by NOVACPA
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To: grundle

GM still owes the American taxpayer millions of dollars. Their stock will never cover the money still owed.


25 posted on 12/06/2012 5:24:04 PM PST by BlessingsofLiberty (Remember Brian Terry...)
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To: taildragger

isn’t GM building assembly plants in chiner like there’s no tomorrow?


26 posted on 12/06/2012 5:46:32 PM PST by stickywillie
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To: taildragger

chiner motors, now: http://www.youtube.com/watch?v=Lvl5Gan69Wo


27 posted on 12/06/2012 5:49:35 PM PST by stickywillie
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To: Chode
oh God, please oh please oh please oh please oh please

That reminds me...:-)

28 posted on 12/06/2012 5:51:16 PM PST by taildragger (( Tighten the 5 point harness and brace for Impact Freepers, ya know it's coming..... ))
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To: stickywillie
isn’t GM building assembly plants in chiner like there’s no tomorrow?

As would any company expecting to prosper in the future. There's little hope in the US in the Era of Baraq.

29 posted on 12/06/2012 5:57:16 PM PST by nascarnation (Baraq's economic policy: trickle up poverty)
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To: taildragger
LOL!!! i still miss Larson...
30 posted on 12/06/2012 6:02:19 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: taildragger
LOL!!! i still miss Larson...
31 posted on 12/06/2012 6:06:08 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: grundle

I read an article here on FR a few months ago that said GM was using bailout money to set up 15 (fifteen) mfg. facilities in China!

That’s hardly saving or creating jobs for Americans.

I hope the Judge properly rules and that GM goes into bankruptcy.


32 posted on 12/06/2012 6:11:34 PM PST by octex
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To: nascarnation

I hear you, but GM is building in China on our dollars. and the UAW owns a chunk of GM...how do they like the jobs going to china?


33 posted on 12/06/2012 6:12:11 PM PST by stickywillie
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To: stickywillie

UAW is sending jobs to China!

BTW- they own a chunk of GM... what is their tax rate?

Or do unions not pay taxes?


34 posted on 12/06/2012 6:13:35 PM PST by GeronL (http://asspos.blogspot.com)
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To: taildragger

AFL-CIO probably brought in over a billion a year in dues, how much do they pay in taxes?


35 posted on 12/06/2012 6:17:34 PM PST by GeronL (http://asspos.blogspot.com)
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To: grundle

Not to worry...obamskyovich says that volt sales will be through the roof...


36 posted on 12/06/2012 7:48:32 PM PST by SuperLuminal (Where is another agitator for republicanism like Sam Adams when we need him?)
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To: GreyFriar
Al Quaeda is alive and GM is Dead!

post of the day!!!!!!!

37 posted on 12/06/2012 8:23:28 PM PST by RatRipper (Self-centeredness, greed, envy, deceit and lawless corruption has killed this once great nation.)
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To: GreyFriar

Thanks for the ping. The judge is likely to be “persuaded” to support the illegal Government Motors deal.


38 posted on 12/06/2012 8:33:24 PM PST by zot
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To: Springman; cyclotic; netmilsmom; RatsDawg; PGalt; FreedomHammer; queenkathy; madison10; ...
The perfect storm. Detroit collapsing, unions collapsing, and now this.

Image Hosted by ImageShack.us

Weekly/biweekly Michigan legislative activism thread

Michigan Action Alert on Right To Work
39 posted on 12/07/2012 12:33:01 PM PST by cripplecreek (REMEMBER THE RIVER RAISIN!)
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To: cripplecreek; grundle; All

Thanks for the ping; post; thread.


40 posted on 12/07/2012 3:10:04 PM PST by PGalt
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To: knarf
It would take a man of integrity to admit he screwed up, accused obama of hustling him and reverse his decision.

Or one that wasn't paid. Just sayin.

41 posted on 12/07/2012 6:42:46 PM PST by itsahoot (Any enemy, that is allowed to have a King's X line, is undefeatable. (USS Taluga AO-62))
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To: Chode
i still miss Larson...

Me too. He always made Christmas shopping easier for me.

Couldn't go wrong with a Larson calendar.

Almost a family tradition for a while

42 posted on 12/07/2012 6:57:20 PM PST by digger48
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To: digger48
ain't that the truth... i STILL have two Larson cartoons on my door
43 posted on 12/07/2012 8:28:24 PM PST by Chode (American Hedonist - *DTOM* -ww- NO Pity for the LAZY)
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

Thanks cripplecreek.


44 posted on 12/07/2012 9:04:23 PM PST by SunkenCiv (https://secure.freerepublic.com/donate/)
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