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Mar 20, 2013

CARMAKERS NEWS * USA

* New York - Hedge funds, old GM fail to settle lawsuit. Trust seeks to unravel deal negotiated in 2009 bankruptcy 

NY,USA -Bloomberg News/The Detroit News, by Tiffany Kary -20 March 2013: -- Elliott International LP and a unit of Fortress Investment Group LLC are among hedge funds that failed to reach an agreement with the trust liquidating General Motors' old assets over $3 billion in claims related to the automaker's 2009 bankruptcy filing, according to court papers... The dispute stems from a settlement made between the hedge funds and a Canadian unit of GM the day of the bankruptcy filing. The trust liquidating the old assets, called Motors Liquidation Co. GUC Trust, seeks to reduce or eliminate the claims that the hedge funds negotiated... General Motors Co.'s Chief Financial Officer, Daniel Ammann, testified in past hearings that a negative outcome in the dispute over the Canadian notes could cost the automaker, now out of bankruptcy, as much as $918 million, or 50 cents a share... That damage estimate is the upper end of a range, Amman said, and was disclosed in GM's August quarterly report. Through the settlement, the note holders had a $3 billion claim against Old GM's estate, more than the $1 billion face value of their notes, according to the lawsuit. Mediation "has now concluded without the parties reaching a settlement," lawyers for the trust wrote... The agreement negotiated before the filing with the hedge funds, known as the "lock-up agreement" resolved a dispute over intercompany loans and allowed the U.S. and Canadian governments to buy GM Canada without requiring a separate bankruptcy, GM said...

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