Motors Liquidation Company

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Motors Liquidation Company (MLC), formerly General Motors Corporation, was the company left to settle past liability claims from Chapter 11 reorganization of American car manufacturer General Motors. It exited bankruptcy on March 31, 2011, only to be carved into four trusts; the first to settle the claims of unsecured creditors (OTC Pink: MTLQU), the second to handle environmental response for MLC's remaining assets, a third to handle present and future asbestos-related claims, and a fourth for litigation claims.

Motors Liquidation Company's stock symbol was changed from GMGMQ to MTLQQ, effective July 15, 2009. MTLQQ stock was cancelled. Its unsecured creditors were issued stock for the Motors Liquidation Company General Unsecured Creditors Trust under the symbol MTLQU.

On the morning of 1 June 2009, Chevrolet-Saturn of Harlem, a dealership in Manhattan that was owned by GM itself, filed for bankruptcy protection there, followed in the same court by General Motors Corporation (the main GM in Detroit), GM's subsidiary Saturn LLC, and Saturn LLC's subsidiary Saturn Distribution Corporation. All cases were assigned to Judge Robert Gerber.

The filing by the dealership declared General Motors to be a debtor in possession. The Manhattan dealership's filing allowed General Motors to file its own bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York, its preferred court. Normally for such cases, the company would have filed in the courts located in the state(s) where the company is incorporated, or where it conducts operations, which for Detroit-headquartered General Motors would have been the courts in Michigan or Delaware, where it is incorporated. General Motors' attorneys, however, preferred to file in the federal courts in New York, because those courts have a reputation for expertise in bankruptcy. In a press conference that began four hours and eighteen minutes after the filing, the GM Chief Executive Officer, Fritz Henderson, stressed that he intended for the bankruptcy process to move quickly. In addition to Henderson's press conference, President of the United States Barack Obama made a speech from the White House four hours three minutes after the court filing.

Prior to General Motors bankruptcy filing, U.S. state law governed the minimum required distance between same-franchise dealers; known as the eight-mile rule. The eight-mile rule prohibits same-franchise dealers from locating within eight miles of each other. In 2001 General Motors formally declared Project 2000 would be implemented as part of a brand-channeling strategy designed to consolidate its network of privately owned individual franchise dealerships and reduce the number of locations from 7,300 to 3,800. Project 2000 served as the primary mechanism for combining single-point Buick-Pontiac-GMC dealer locations together forming a single corporate brand division (BPG). Project 2000 also targeted single-point Cadillac-Hummer-Saab dealer locations and allowed single-point Chevrolet and Saturn dealer locations to stand on their own. Project 2000 calculated the fair market value for each individually owned dealer franchise to be $3,000 per vehicle based on total volume from any one of the previous three years. Upon agreement of a fair market value, dealers with interest in selling their franchise rights were free to negotiate with each other, and ultimately execute a buy-sell agreement which contained mutually agreed upon terms and conditions required to legally sell and transfer franchise property and ownership rights. Section 363 of the Federal Bankruptcy Code expedited General Motors Project 2000 efforts to reduce its dealer network and circumvent state and federal criminal laws prohibiting the illegal sale of property, or transfer of ownership by an unauthorized party. Thousands of family-owned, , well-capitalized dealerships were forced to forfeit their franchise rights to a neighboring dealer-competitor selected by General Motors. Compensation has not yet been awarded in cases where individual dealer franchise property and ownership rights were transferred for the purpose of granting such rights to a nearby dealer selected by General Motors. In addition to reports of fraud and theft filed with the police, GM dealers joined to form the Committee to Restore Dealer Rights. The committee to restore dealer rights is responsible for helping draft HR 2743, which asserts the action taken by General Motors to consolidate its dealer network by transferring individual dealer franchise ownership and property without compensation was illegal. As of 22 February 2010, HR 2743 remains in committee.

The General Motors bankruptcy case was formally entitled In re General Motors Corp., case number 09-50026 in the Southern District, Manhattan, New York. General Motors was represented by the New York specialist law firm Weil, Gotshal & Manges. The United States Treasury and an ad hoc group of the bondholders of General Motors Corporation were also represented in court.

This page was last edited on 10 May 2018, at 05:12.
Reference: under CC BY-SA license.

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