There were approximately 479 objections filed by the June 15, 2009 deadline by suppliers and other trade creditors to GM’s proposed cure costs (click link to see list). An additional 75 objections were filed after the deadline and on or before June 20, 2009.  As in the case of Chrysler, the majority of the objections were to cure cost amounts.  However, as noted in our prior post, the cure cost procedures also provided a frequent basis for objection. As a final irony, Chrysler’s objection was among the most vehement (as well as apparently a day late).  In the following post, we discuss the substantive objections and provide a sampling of the differences between GM’s cure costs and cure costs computed by suppliers. 

Chrysler Wades In – Cure Costs Do Include Post Petition Dues

The most consistent substantive objection was the failure of the cure cost amount to include amounts for delivery of goods and services after the petition date.  This was also the most common substantive objection in the Chrysler bankruptcy.  Ironically, Chrysler’s objection to GM’s cure costs stated:  “The cure amount must also include all accrued, non-defaulted obligations and any other amount due through the Assumption Effective Date.”  This is contrary to the position taken by Chrysler in its own pending bankruptcy in the same district.

Lear Says Don’t Cherry Pick Our Contracts

As to other, substantive objections, Lear Corporation made a insightful objection.  Lear argued that GM had only made selective assumptions of contracts and that selection rendered future performance impossible.

Lear also objects to Debtors’ omission, possibly inadvertent, of certain contracts when related contracts have been assumed. For example, Debtors have identified for assumption contracts related to a seating system but have omitted certain contracts related to specific components, parts or variations (such as colors) of that system. It would be unfair and impractical to expect Lear to perform the contracts without the omitted components, parts or variations.

Alcoa Asks – Are these Executory?

There were several objections from suppliers on the grounds that not all of the contracts listed to be assumed were executory contracts. This objection reflects a valid concern. If a purchase order is a spot order and it is filled and paid for then the contract, absent unusual terms, should not be an executory contract under Section 365. The supplier would not want that purchase order to be assigned because liability under any warranty for defective product would also be assigned. In other words, a supplier would not want NewCo to be able to claim damages under the warranty under a purchase order that has been filled and for which the supplier has been paid.

Alcoa was one of the suppliers making this objection, stating:

Additionally, Alcoa has not been able to determine, with specificity, the propriety of the Debtors’ assertion that all of the Proposed Executory Contracts (identified as 1,178 contracts) are, in fact, executory contracts between the Debtors and Alcoa as of the Petition Date. While the Debtors identify 1,178 contracts as “executory contracts” designated for assumption and assignment, Alcoa’s internal review estimates that approximately 100 contracts between the Debtors and Alcoa are executory as of the Petition Date and, thus, subject to assumption and assignment.

What About Ancillary Charges

There were a few objections to the failure of the cure cost to include cancellation costs and expenses and costs incured by suppliers due to GM’s failure to meet minimum quantity requirements.  However, there were fewer of these types of objections than in the case of the Chrysler bankruptcy.

We Are Not Here Anymore But You Can Pay Us

Sadly, there were a few objections that reflect the difficult times for suppliers.   At least a couple of Suppliers responded that they had or were in the process of liquidating and were not able to perform the contracts that were to be assigned.  Lapeer Metal Stamping Companies, Inc.  is illustrative:

“Lapeer previously ceased all business operations, has sold substantially all of its operating assets and is in the process of liquidating its remaining assets. As a result, Lapeer has no ability to perform any of the alleged Lapeer Contracts. In addition, certain of Lapeer’s contracts with Debtors were sold, transferred and/or assigned, with Debtors’ knowledge and consent, to a third-party entity unrelated to Lapeer.”

Lapeer went on to add that it “has no objection to the Debtors paying Lapeer on any outstanding invoices.”  (Lapeer may be out of business but they have not lost their minds.)

Cure Amount is What? – You Must Be Kidding

With respect to the issue of the amount of cure costs as determined by GM versus what was on the Suppliers’ books and records, we did a sampling of objections.  The result of that sampling is summarized in the following table:

Supplier Name GM Cure Cost Supplier Cure Cost Differential
A Raymond, Inc $14,584.00 $40,084.00 $25,500.00
Accuride Corporation $324.00 $1,618,647.00 $1,618,323.00
Acument Global Technologies, Inc $1,173,204.00 $2,024,204.00 $851,000.00
ADAC-Strattec LLC $186,874.00 $205,614.00 $18,740.00
Air International (U.S.), $1,166,937.00 $1,333,833.00 $166,895.00
Airtex Products, L.P $- $96,576.00 $96,576.00
Aisin World Corp. of America $3,822,774.00 $10,079,147.00 $6,256,373.00
Alcoa Inc. $16,336.00 $1,000,000.00 $983,664.00
Alps Automotive, Inc $2,061,496.00 $2,838,010.00 $776,514.00
APL Co. Pte. Ltd., American President Lines, Ltd $12,055.00 $826,605.00 $814,550.00
APL Logistics Ltd., $12,055.00 $1,538,128.00 $1,526,073.00
Applied Handling Inc $4,472.00 $7,995.00 $3,524.00
ArvinMeritor, Inc $6,776,973.00 $8,041,289.00 $1,264,316.00
Autodata Solutions, Inc $50,000.00 $100,000.00 $50,000.00
Autoliv ASP, Inc $4,331,972.00 $14,134,105.00 $9,802,133.00
BorgWarner, Inc $6,708,933.00 $7,519,721.00 $810,788.00
Champion Laboratories, Inc $2,140,145.00 $2,511,798.00 $371,654.00
Clarcor, Inc., Total Filtration Services, Inc $419,281.00 $558,251.00 $138,970.00
Comprehensive Logistics Co., Inc $2,058,695.00 $7,664,561.00 $5,605,866.00
Continental Plastics Company $1,423,981.00 $2,384,668.00 $960,687.00
Cooper-Standard Automotive, Inc $6,474,338.00 $22,845,512.00 $16,371,174.00
Delta Tooling Co $118,520.00 $169,988.00 $51,467.00
Dura Automotive Systems, Inc $739,127.00 $1,000,000.00 $260,873.00
Dynax America Corp., Exedy America Corp $811,969.00 $2,073,511.00 $1,261,541.00
Ernie Green Industries, Inc $411,173.00 $525,839.00 $114,666.00
Falcon Transport Co. $9,090.00 $16,732.00 $7,642.00
Faurecia Exhaust Systems, Inc., $8,585,398.00 $23,687,757.00 $15,102,359.00
Ficosa North America Corporation, $1,062,270.00 $1,167,056.00 $104,786.00
Figura, S.A. de C.V $266,891.00 $346,314.00 $79,423.00
Flextronics International Ltd., et al $33,617.00 $781,694.00 $748,077.00
Gates Corporation $6,960,128.00 $2,804,387.18 plus 5,706,393.00 CAD, and 1,267,766.93 GBP Undetermined
Georg Fischer Automotive AG $3,651.00 $183,310.00 $179,659.00
GHSP, Inc $501,000.00 $1,098,000.00 $597,000.00
GKN $2,537,255.00 $2,821,136.00 $283,881.00
Gonzalez-Group $64,041.00 $107,738.00 $43,697.00
Gonzalez-Group $64,040.00 $90,444.00 $26,403.00
Henkel Corporation $1,018,188.00 $2,912,876.00 $1,894,689.00
Henniges Automotive Holding, Inc $2,427,468.00 $7,130,951.00 $4,703,483.00
Horiba Ltd., Horiba Instruments Inc $374,257.00 $1,876,589 plus €832,651 Undetermined
Hutchinson Industrial Rubber Products Co. LD, $6,371,748.00 $12,445,853.00 $6,074,105.00
International Business Machines Corporation (IBM) $8,712,851.00 $30,735,909.00 $22,023,058.00
Internet Brands, Inc $- $116,512.00 $116,512.00
Jason Incorporated d/b/a Janesville Acoustics $255,760.00 $1,051,036.00 $795,277.00
Jefferson Wells International, Inc $120,435.00 $521,821.00 $401,386.00
Jernberg Industries, Inc $100,000.00 $1.1MM to $1.5MM. Undetermined
Johnson Controls, Inc $61,987,447.00 $103,411,665.00 $41,424,218.00
JTEKT Automotive Tennessee – Vonore, Co., $1,158,661.00 3,104,983.981 JPY plus $ 2,715,339 Undetermined
Koch Enterprises, Inc $580,323.00 $919,356.00 $339,033.00
Lowes Companies, Inc $314,940.00 $635,100.00 $320,160.00
Macquarie Equipment Finance, LLC $- $799,946.00 $799,946.00
MannHummel Mexico S.A. de C.V., et. al. $1,219,611.97 $8,345,529.00 $7,125,917.00
Martinrea International, Inc $6,624,273.00 $35,931,548.00 $29,307,275.00
MBL (USA) $8,994.00 $111,808.00 $102,814.00
Medialink Worldwide $8,071.00 $74,022.00 $65,950.00
Mitsuba Corp $511,485.00 $673,464.00 $161,979.00
New Mather Metals, Inc $2,566.00 $164,328.00 $161,762.00
NGK Spark Plugs (U.S.A.), Inc $2,806,230.00 $3,929,751.00 $1,123,521.00
Nisshinbo Automotive Corp $5,183.00 $20,709.00 $15,526.00
Paragon Metals, Inc $- $222,491.00 $222,491.00
PGW, LLC $1,595,875.00 $2,225,135.00 $629,260.00
Pioneer Steel Corporation $172,885.00 $184,885.00 $12,000.00
Relational Technology Solutions $87,453.00 $1,483,239.00 $1,395,786.00
Rubber Enterprises Incorporated $54,704.00 $76,302.00 $21,598.00
Security Packaging, Inc $1,070,729.00 $1,680,973.00 $610,244.00
Sprint Nextel Corporation $528,807.00 $3,400,000.00 $2,871,193.00
Strattec Power Access LLC $1,592.00 $211,806.00 $210,214.00
Strattec Security Corporation $2,407,955.00 $2,704,941.00 $296,986.00
Sumitomo Electric Wiring Systems, Inc $358,680.00 $9,521,801.00 $9,163,121.00
Summit Polymers, Inc $343,660.00 $521,089.00 $177,429.00
Tecta America Corp $26,268.00 $129,267.00 $102,999.00
ThyssenKrupp Steel Stahl-Service Center GmbH, $2,775,257.00 $17,947,067.00 $15,171,810.00
TitanX Engine Cooling, Inc $- $240,000.00 $240,000.00
TPI Incorporated $903,659.00 $1,693,139.00 $789,480.00
Trico Products Corporation $356,832.00 $502,212.00 $145,379.00
Unico, Inc $35,542.00 $103,509.00 $67,967.00
Unique Fabricating, Inc $58,370.00 $76,359.00 $17,989.00
US Farathane Corporation $855,008.00 $1,485,066.00 $630,058.00
Visiocorp USA, Inc $618,448.00 $1,365,040.00 $746,593.00
Willette Acquisition Corp., $- $415,755.00 $415,755.00
Yazaki North America, Inc $7,573,831.00 $8,954,190.00 $1,380,359.00
Yorozu America Corporation $4,127,243.00 $4,987,173.00 $859,929.00

For more post on the GM Bankruptcy, click the Filed under General Motors Bankruptcy link below.