Detroit, Michigan – Chapter 11 proceedings for Motors Liquidation Company (MLC), the old General Motors Corporation, have been confirmed by the U.S. Bankruptcy Court, paving the way for a unique trust structure to continue environmental remediation, claims resolution and stock distribution to unsecured creditors.
General Motors Corporation was renamed Motors Liquidation Company on July 10, 2009, when substantially all of the automaker’s operating assets were transferred to a new and independent company, the current General Motors Company. MLC’s Chapter 11 case is one of the largest and most complex bankruptcy cases in the U.S. history.
Also included in the confirmation ruling is MLCS, formerly Saturn.
“Confirmation 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,” said Al Koch, CEO 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.”
The plan creates four trusts, including the General Unsecured Creditors Trust, which will be responsible for resolving the outstanding claims of unsecured creditors and distributing General Motors Company’s outstanding common stock and warrants owned by MLC to those unsecured creditors whose claims are allowed.
MLC has successfully negotiated the resolution of nearly 85 per cent of the US$275 billion in claims that were filed against the company since the June 2009 bankruptcy filing. Additionally, an Environmental Remediation Trust (ERT), created by MLC in conjunction with federal, state and local regulators, provides $536 million for the continuing environmental remediation of remaining properties, in some cases for as long as 100 years. The trust’s assets will consist of cash, remaining unsold real properties, and equipment 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. The plan provides this assurance and has contributed to the sale or agreement to sell more than a dozen MLC properties.”
A third trust will handle both present and future asbestos-related claims, while a fourth will deal with certain litigation-related claims.
Although environmental remediation has been necessary at many of the sites under MLC’s control, the company has been able to recently sell or secure sales agreements for eleven properties, including Pittsburgh Stamping, Moraine Assembly in Ohio, Grand Rapids Stamping in Michigan, Parma complex and land in Ohio, and seven properties in Pontiac, Michigan.