Motors Liquidation Company (fka MTLQQ)

[puppydotcom]

final wind-down bankruptcy in place - last chance to bail

GM bankruptcy plan improperly treats debt, toxins, creditors say
Tiffany Kary / Bloomberg News

Creditors of General Motors Corp.'s unwanted businesses opposed a final wind-down bankruptcy plan because they say it improperly treats $1.3 billion in debt and doesn't account for environmental cleanup costs in two states.

Hedge funds holding notes in Motors Liquidation Co.'s Nova Scotia unit filed objections to the plan today in Manhattan bankruptcy court, where a confirmation hearing is scheduled for March 3. Onondaga County, New York, and the California Department of Toxic Substances Control also filed objections.

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When GM filed for bankruptcy in June 2009, it sold some assets to a newly formed company that has since gone public. Unwanted properties were left under bankruptcy protection. An outline of the terms of a plan for so-called Old GM was approved by the bankruptcy court Dec. 7.

Under an agreement designed to prevent GM Canada from also filing for bankruptcy, General Motors Nova Scotia Finance Co. relieved GM Canada of $1.3 billion in intercompany loans before the U.S. bankruptcy filing. Appaloosa Management LP, Aurelius Capital Management LP, Elliott Management Corp. and Fortress Investment Group LLC, holders of notes in General Motors Nova Scotia Finance, said the sale was used to wrongly avoid paying $1.3 billion in debt.
Initial Distributions

The debtors "are seeking, through the plan, to deprive the Nova Scotia Noteholders and the Nova Scotia Trustee of entitlement to any initial distributions under the Plan," the funds said in their filing.

Onondaga County said the plan doesn't give accurate cost estimates or other information about polychlorinated biphenyls from a facility in Salina, N.Y., adjacent to Ley Creek, where it flows into Onondaga Lake. PCBs are organic compounds that the U.S. Environmental Protection Agency says have been demonstrated to cause cancer.

In its objection, the California Department of Toxic Substances Control said it has environmental claims for three sites in the state. The bankrupt businesses are liable to the agencies for the ongoing pollution from the sites, the agency said.

The case is In re Motors Liquidation Co., 09-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

From The Detroit News: http://detnews.com/article/20110211/AUTO01/102110445/GM-bankruptcy-plan-improperly-treats-debt--toxins--creditors-say#ixzz1DlK1VRdw