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Lenders and hundreds of investors agreed on Monday to pay 231 million U.S. dollars to end their decade-long legal fight over a clerical error in a loan of 1.5 billion U.S. dollars to General Motors that was administered by JPMorgan Chase Co, 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 U.S. dollars that was paid to GM's secured lenders.
The loan of 1.5 billion U.S. dollars 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 financing of 300 million U.S. dollars. The law firm handling the paperwork accidentally included a lien that secured the loan of 1.5 billion U.S. dollars in the list of security interests it terminated after the 300 million U.S. dollars 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 loan of 1.5 billion U.S. dollars, 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predecessor filed for bankruptcy in 2009, beset by a deep U.S. recession, an enormous debt load, high labor costs and outdated car models.
(CGTN)
