GM Bankruptcy – Selective Cure List and Substantive Objections

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. 

GM Bankruptcy – Cure Costs Procedures Catastrophic Failures

Automotive suppliers can only hope that GM will make better cars than they do cure cost procedures.  Based on the cure cost objections (“Cure Cost Objections”) filed, the procedures approved by the Bankruptcy Court either were flawed from the beginning or improperly executed. The net result is to cast a shadow on the entire contract assignment and assumption process pursuant to the proposed 363 sale to New GM. In the following post we discuss the problems experienced by suppliers.  In a later post, we summarize the substantive objections that were filed and give a sampling of the differences between the GM cure costs and the Supplier cure amounts.

GM Bankruptcy – For Suppliers Chrysler Bankruptcy Lesson 1

(Update: Since the original post date we have added two additional posts on the GM Cure Cost Procedure and the Supplier Objections that were filed to GM Cure Costs. Please Click the preceding link to see those posts.)

The Chrysler bankruptcy taught suppliers several lessons.  Lesson 1 –  SUPPLIERS, BE READY TO CONFIRM THE CURE AMOUNT FOR THE ASSIGNMENT OF GM SUPPLY CONTRACTS. Consider the years that your company has worked with GM. If your company got a cure cost notice from GM today, would it be ready to say “If GM pays my company this amount, my company has no further claims against GM, and if it does have additional claims, we give them up?” A lot of suppliers in the Chrysler bankruptcy found out the hard way that they were not ready to respond; the pain just has not hit yet.

GM Bankruptcy – Debtors and Petitions

General Motors Corporation (“GM”) and 3 affiliated entities (collectively with GM, “Debtors”) have filed bankruptcy.  Chevrolet-Saturn of Harlem, Inc. and Saturn, LLC are direct subsidiaries of General Motors Corporation. Saturn Distribution Corporation is referred to by General Motors Corporation as an “indirect subsidiary.”  However,GM has hundreds of subsidiaries and having only 3 subsidiaries file petitions is remarkable.  Compare, for example, Chrysler’s bankruptcy where 24 subsidiaries filed. However, for GM and its suppliers, having only 4 debtors greatly simplifies many aspects of the bankruptcy process.

GM Bankruptcy – 50 Largest Unsecured Bankruptcy Creditors

General Motors Corporation filed bankruptcy in the Southern District of New York on June 1, 2009.  It has requested authority to file a consolidated list of the 50 largest unsecured creditors of General Motors and its affiliated Debtors (the “Top 50 List”) in lieu of a separate list for each of the Debtors. The Top 50 List is based on the Debtors’ books and records as of approximately May 31, 2009. The Top 50 List does not include persons who come within the definition of “insider” under the Bankruptcy Code.

The amounts owed to each of the unsecured creditors is listed as trade debt. None of the amounts were listed as being contingent, unliquidated, disputed or subject to setoff.

The following Top 50 List can be sorted by any column by clicking the column heading: