As previously disclosed, including most recently in its Annual Report on Form10-K for the year ended March 31, 2019, the Motors Liquidation Company GUC Trust (the “GUC Trust”) has been involved in litigation commenced by the Committee of Unsecured Creditors of Motors Liquidation Company, on behalf of Motors Liquidation Company (formerly known as General Motors Corporation, or Old GM) and its affiliated debtors anddebtors-in-possession (the “Debtors”), on July 31, 2009 (the “Term Loan Avoidance Action”), which sought the return of approximately $1.5 billion that had been transferred by the Debtors to a consortium of prepetition lenders (the “Secured Lenders”) to Old GM, in respect of a term loan extended to Old GM by such Secured Lenders.
As previously disclosed on a Current Report on Form8-K filed by the GUC Trust on May 17, 2019 (the “TLAA Settlement8-K”), the Motors Liquidation Avoidance Action Trust (the “AAT”), the GUC Trust, the defendants to the Term Loan Avoidance Action and Simpson Thacher and Bartlett LLP entered into that certain Settlement Agreement, dated as of April 10, 2019 (the “TLAA Settlement Agreement”), to resolve the Term Loan Avoidance Action, which TLAA Settlement Agreement was subject to the approval of the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). On May 13, 2019, the AAT filed with the Bankruptcy Court a motion to approve the TLAA Settlement Agreement pursuant to Federal Rule of Bankruptcy Procedure 9019 (the “TLAA Settlement Approval Motion”), which motion attached the TLAA Settlement Agreement. The TLAA Settlement Approval Motion is incorporated herein by reference to Exhibit 10.1 of the TLAA Settlement8-K.
On June 13, 2019, the Bankruptcy Court issued an order (the “TLAA Settlement Approval Order”) granting the TLAA Settlement Approval Motion and approving the TLAA Settlement Agreement. The TLAA Settlement Approval Order is filed as Exhibit 99.2 to this Current Report on Form8-K. The TLAA Settlement Agreement provides for (among other things): (i) a payment on behalf of the Secured Lenders to the AAT of approximately $231.0 million (the “Settlement Payment”), (ii) filing by the AAT of orders of dismissal with the applicable courts dismissing the claims of the AAT with prejudice, and (iii) releases of claims related to the Term Loan Avoidance Action by the parties to the TLAA Settlement Agreement and certain other persons. An amount corresponding to the amount of the Settlement Payment is being asserted as a general unsecured claim against the GUC Trust, pursuant to the terms of the TLAA Settlement Agreement and the Second Amended and Restated Motors Liquidation Company GUC Trust Agreement, dated as of July 30, 2015 (the “GUC Trust Agreement”), and Section 502(h) of the Bankruptcy Code. Pursuant to the AAT Settlement Agreement, immediately upon the AAT’s receipt of the Settlement Payment from or on behalf of the Secured Lenders, the Secured Lenders will become entitled to payments totaling approximately $68.5 million from the GUC Trust in respect of such general unsecured claims; such payments will be made in accordance with the terms of the AAT Settlement Agreement and the GUC Trust Agreement and are subject to the GUC Trust’s receipt of certain information from the Secured Lenders holding claims under Section 502(h) of the Bankruptcy Code.
The foregoing description of the TLAA Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1 to the TLAA Settlement8-K.
