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Lawyers pressing cases against General Motors say that the automaker concealed the controversial ignition defect when it "took billions of dollars in taxpayer money" during its government-sponsored bankruptcy in 2009, CNNMoney.com reported yesterday. The claim, made by plaintiffs attorneys seeking court approval to bring class action suits against GM, came in court documents filed in federal bankruptcy court on Monday. GM also filed court papers on Monday seeking to protect itself from suits related to the ignition switch recall, which the company has tied to at least 13 deaths. The plaintiffs' lawyers argue that GM should not be able to use its bankruptcy reorganization as a shield against liability in cases stemming from the faulty ignition switch.

For further analysis, make sure to attend the "Large Complex Trusts: A General Motors Case Study" panel at this week's Annual Spring Meeting. This panel will discuss the General Motors bankruptcy case with an in-depth discussion about the issuance of public units in a major bankruptcy. The session will also include the challenges addressed by the trust such as liability claims. For more information or to register, please click here: http://www.abiworld.org/ASM14/

The Supreme Court yesterday declined to hear a dispute from the AMR Corp. bankruptcy over whether the former American Airlines parent owes its bondholders a penalty fee in connection with the prepayment of more than $1.3 billion in debt, Dow Jones Daily Bankruptcy Review reported today. The high court's decision not to take the case means a controversial topic in corporate restructurings, so-called make-whole payments, won't get its day in court. However, restructuring experts have said that the case is very specific to AMR's bankruptcy and likely wouldn't have invited a ruling on the general allowance of make-whole payments.

General Motors Co filed a motion in a U.S. bankruptcy court to enforce a bar on lawsuits related to ignition defects in cars sold before its 2009 bankruptcy as it fights a class action lawsuit that seeks to set aside the restriction, Reuters reported today. The plaintiffs also filed a class action lawsuit yesterday, seeking an order declaring that GM cannot use the bankruptcy protection to absolve itself from liabilities. The faulty ignition switch has been linked to at least 13 deaths and the recall of 2.6 million GM vehicles. GM emerged from a government-assisted chapter 11 filing in 2009 as a different legal entity than the so-called old GM. Under those terms, the "new GM" shed liability for incidents predating its exit from bankruptcy, and any lawsuit related to pre-bankruptcy issues must be brought against what remains of old GM. "New GM's recall covenant does not create a basis for the plaintiffs to sue new GM for economic damages relating to a vehicle or part sold by old GM," the company argued in a court filing yesterday.
http://www.reuters.com/article/2014/04/22/gm-recall-lawsuit-idUSL3N0NE2…

For further analysis, make sure to attend the "Large Complex Trusts: A General Motors Case Study" panel at this week's Annual Spring Meeting. This panel will discuss the General Motors bankruptcy case with an in-depth discussion about the issuance of public units in a major bankruptcy. The session will also include the challenges addressed by the trust such as liability claims. For more information or to register, please click here: http://www.abiworld.org/ASM14/

The trustee unwinding Peregrine Financial Group cut a deal to pay 30 cents on the dollar to a former foreign exchange customer, a settlement he hopes to apply to thousands of other customers, Dow Jones Daily Bankruptcy Review reported today. Trustee Ira Bodenstein in a court filing on Wednesday said that forex customer ASM Capital agreed to drop litigation related to its claims and accept the settlement. Bodenstein said he's willing to strike similar settlements with other former forex and over-the-counter metals customers of the defunct brokerage.

The Archdiocese of Milwaukee won a victory in its bankruptcy case yesterday when U.S. Bankruptcy Judge Susan V. Kelley agreed to move forward with a key document that, once approved, would put the local church one step closer to exiting its 3-year old chapter 11 proceedings, the Milwaukee Journal-Sentinel reported today. Judge Kelley stressed Thursday that she was not taking up the archdiocese's reorganization plan, only its accompanying disclosure statement. Attorneys for the creditors committee, which includes sex abuse survivors, had asked Kelley to delay acting on the statement. They argued that the judge should first decide a separate point of contention: whether the archdiocese had the right to include in the reorganization plan that a pending lawsuit over $60 million in archdiocesan cemetery funds would be settled. Judge Kelley denied those requests, saying that she was determined to move the case forward.

Sen. Richard Blumenthal (D-Conn.) said yesterday that bankruptcy judges should deny General Motors protection from liability claims tied to the safety recall of 2.6 million cars, the Detroit Free Press reported today. Blumenthal was responding to reports that GM plans to ask a bankruptcy judge for protection from claims arising from the defect. In a legal filing last week, the company said that it was afforded that protection as part of its 2009 bankruptcy reorganization and would ask a judge in New York soon to reaffirm that, an action which could result in the dismissal of class-action lawsuits around the country. Blumenthal, who was Connecticut’s attorney general in 2009, was a critic of providing GM the bankruptcy protection. Yesterday he reiterated his call to force GM to establish a fund to compensate people injured or families who lost relatives in crashes tied to the defect.
http://www.freep.com/article/20140416/BUSINESS01/304160155/sen-richard-…

In related news, General Motors Co.’s move to freeze ignition-defect lawsuits in California and Texas has solid legal precedent behind it and could help slash customer demands for compensation by billions of dollars, according to a Bloomberg News analysis today. GM asked federal judges in both states last week to delay litigation over the defect in several of its models until a U.S. bankruptcy judge in New York rules whether some accident victims’ claims can be brought without violating a sale order in its government-assisted bankruptcy in 2009.
http://www.bloomberg.com/news/print/2014-04-16/gm-move-to-freeze-lawsui…

For further analysis, make sure to attend the "Large Complex Trusts: A General Motors Case Study" panel at ABI's Annual Spring Meeting. This panel will discuss the General Motors bankruptcy case with an in-depth discussion about the issuance of public units in a major bankruptcy. The session will also include the challenges addressed by the trust such as liability claims. For more information or to register, please click here: http://www.abiworld.org/ASM14/

A federal judge yesterday said that a lawsuit filed by a former MF Global Holdings Ltd. futures customer against former Chief Executive Jon S.Corzine and other top officials could move forward but dismissed all claims against the failed brokerage's independent directors and investment firm J.C. Flowers, Dow Jones Daily Bankruptcy Review reported today. U.S. District Judge Victor Marrero said that former MF Global customer Sapere CTA Fund LP can pursue its lawsuit against Corzine and some of his others — including former No. 2 Bradley I. Abelow and ex-finance chief Henri J. Steenkamp — alleging that the firm's liquidity crisis was brought on by an ill-conceived trades devised by Corzine, a former governor of New Jersey. Sapere contended that it had millions of dollars in cash and United States Treasury bills in accounts at MF Global 's FCM subsidiary in late 2011, when MF Global filed for bankruptcy.

The banks being sued by Lehman Brothers Holdings Inc. in a long-simmering derivatives fight say that Lehman is seeking an "undue advantage" in the litigation by prohibiting the banks from seeking a dismissal without first receiving class-action status, Dow Jones Daily Bankruptcy Review reported today. In bankruptcy court filing on Monday, lawyers for 77 banks and other entities said that Lehman's bid to put the brakes on their bid to dismiss the lawsuit was unfair, and that receiving approval for class-action status should be a "secondary" matter. Lehman affiliates Lehman Brothers Special Financing Inc. and Lehman Brothers Financial Products Inc. in September 2010 sued the banks to recover funds the investment bank says were wrongly transferred to credit-default swap counterparties after it filed for bankruptcy protection. The swaps contained “flip clauses” that give investors priority over a counterparty that defaults.

LightSquared says that it was right to keep Dish Network Corp. Chairman Charlie Ergen out of its restructuring plans, claiming it is "not required to negotiate with a competitor in its capital structure" even if that competitor owns nearly $1 billion of the company's debt, the Wall Street Journal reported today. In a Saturday filing with U.S. Bankruptcy Court in Manhattan, lawyers for Philip Falcone's wireless venture continued making their case that the reorganization plan is fair to Ergen, LightSquared's top secured lender. "There is simply no doubt that [Ergen] is receiving the indubitable equivalent of its claim," LightSquared said in a filing. Ergen has argued that LightSquared's proposal to pay back his nearly $1 billion in bank debt over seven years via a note, rather than in cash like a group of hedge funds that own the same type of debt, violates the Bankruptcy Code.

Unsecured creditors expected to go unpaid in Sbarro LLC 's second trip through bankruptcy say that the pizza chain is blatantly disregarding landlords and others owed money by the company, Dow Jones Daily Bankruptcy Review reported today. The official committee representing Sbarro's unsecured creditors on Monday filed an objection to Sbarro's proposed $20 million bankruptcy loan, which it says sets the restaurant company's restructuring on a path that hurts the committee's members. Unsecured creditors aren't expected to recover any of their claims through the restructuring.