Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Long fight over error in JPMorgan loan to GM settles for $231 mln

Published 2019-05-13, 07:02 p/m
Updated 2019-05-13, 07:10 p/m
© Reuters.  Long fight over error in JPMorgan loan to GM settles for $231 mln

© Reuters. Long fight over error in JPMorgan loan to GM settles for $231 mln

By Tom Hals

WILMINGTON, Del, May 13 (Reuters) - Lenders and hundreds of investors agreed on Monday to pay $231 million to end their decade-long legal fight over a clerical error in a $1.5 billion loan to General Motors (NYSE:GM) that was administered by JPMorgan Chase & Co (NYSE:JPM) JPM.N , according to court documents.

The settlement payment will benefit the unsecured creditors of General Motors' 2009 bankruptcy, as well as the U.S. and Canadian governments, which helped finance GM's Chapter 11 case.

The unsecured creditors, who collected pennies on the dollar from GM's bankruptcy, have been trying for years to recoup some of the $1.5 billion that was paid to GM's secured lenders.

The $1.5 billion loan was syndicated to hundreds of investors who were defendants in the lawsuit. The individual settlement contributions by JPMorgan, a law firm that handled the paperwork and the investors in the loan were not disclosed in court documents.

JPMorgan declined to comment.

The dispute stemmed from the unintentional release of a lien on GM equipment due to a paperwork error.

At the end of 2008, the automaker was preparing to pay off a $300 million financing. The law firm handling the paperwork accidentally included a lien that secured the $1.5 billion loan in the list of security interests it terminated after the $300 million was repaid.

Releasing the lien rendered part of the loan unsecured, allowing a trustee working for unsecured creditors of GM to try to claw the money back.

The mistake did not invalidate all liens securing the $1.5 billion loan, and the parties have spent years disputing whether GM assets such as robots and conveyor belts secured loan.

GM's predecessor filed for bankruptcy in 2009, beset by a deep U.S. recession, an enormous debtload, high labor costs and outdated car models.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.