New York (HedgeCo.Net) In a bid to finally end litigation going back to 2009, General Motors has agreed to pay out $50 million to hedge funds that believe they were wronged in a 2009 deal with regards to the company’s bankruptcy filing.
In 2012, a trust representing unsecured creditors of “old” GM filed a lawsuit against GM over payments made to hedge funds in 2009 in exchange for waiving of claims against GM’s Canadian subsidiary. The deal, despite its disclosure in an SEC filing on the day GM sought Chapter 11 protection, could have prompted a reopening of the 2009 case.
Reuters reports: “The agreement ends complex litigation in which hedge funds affiliated with John Paulson and Paul Singer’s Elliott Management agreed to reduce the amount they said they were owed in the bankruptcy of “Old GM.” GM had warned the litigation could put it on the hook for $918 million. That threat was removed by the settlement.”
In the news recently General Motors has been plagued by controversy for its labor practices abroad, its steady outsourcing of production from the United States, and its demands for concessions from its workers.
In a recent and ongoing scandal, the General Motors plant in Colombia reportedly fired roughly 200 workers after they were injured on the assembly line, and in August 2012 negotiations refused to cover even the workers’ medical costs or pension benefits. In protest, a group of the workers has been living in tents outside the U.S. Embassy in Colombia since August 2011, and the president of the workers’ association, ASOTRECOL, went on a 72-day hunger strike from late 2012 to early 2013. General Motors has refused to enter new negotiations with the workers, with GM spokeperson Katie McBride saying that the company’s stance had been “very generous.”
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