A lawsuit was filed at the end of last month by the Employees’ Retirement System of the City of Montgomery. It relates to a $1.5b syndicated loan organised by JP Morgan to General Motors in 2009, before the auto company went bankrupt. The City of Montgomery says it is representing some 400 participants to the syndicated loan to General Motors.
Rights extinguished
A mistake by a paralegal at Mayer Brown, acting for General Motors, meant that a security interest on the loan was unexpectedly extinguished - against the interests of the 400 lenders and without their knowledge or agreement. Had the interest been treated properly then the loan would have been repaid despite the fact that the car manufacturer went bankrupt after the loan was made.
General Motors could gain
As it is, the loan was repaid but the creditors committee at General Motors is seeking the $1.5bn back from the 400 participants. Source: ABA
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