General Motors was dealing with deep financial struggles and they received a federal bailout that was approved by Barak Obama in 2009, an act that he claims was one of his first achievements as president. Unfortunately, there is great unrest as to what will happen to GM because of a lawsuit that was recently filed by a trust that represents a group of old GM unsecured creditors. They are claiming that the deal that was struck was regarding a “lockup agreement” to keep them from filing a lawsuit originally was unfair for the unsecured creditors.
This lawsuit also addresses that GM allegedly did not fully disclose these specific details of the hedge fund to the bankruptcy court. The threat of this lawsuit is severe, if the court finds that GM is guilty of these actions then it is possible that their original bankruptcy deal will be completely unraveled and they will be left to owe roughly $1.3 billion in claims from the lawsuit. Judge Robert E. Gerber is the presiding judge over the GM case, and at this time he is unsure as to which way the decision will swing, however he does fear that either way GM will still be required to pay a significant amount of money to the creditors.
There is a possibility that the restructuring deal won’t have to be completely erased, it is estimated that they will likely owe the unsecured creditors at least $1 billion because of the stocks dropping. The judge addresses the issue of the hedge fund not being fully disclosed to him originally, and at this time will not say whether it would have altered his decision to grant GM the original deal. While the average person may not be dealing with billions of dollars in their bankruptcy, debt is still debt and action must be taken in order to fight your way out of it. Contact Malaise Law Firm today for more information regarding your debt situation, and to see if bankruptcy is the right option for you.