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Former General Motors seeks to enforce terms of retiree settlement, affirm cap on VEBA payments
By Jennifer Lanning Drey
Savannah, Ga., Oct. 22 - Motors Liquidation Co., formerly General Motors Corp., asked the U.S. Bankruptcy Court for the Southern District of New York to rule that the terms of a lawsuit filed by the International Union of United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) against the new General Motors violate the terms of its prior sale agreement and a related settlement agreement.
According to the motion, the UAW is seeking to force the new General Motors to make a $450 million contribution to the new Voluntary Employees' Beneficiary Association (VEBA) trust that is above what was outlined in the UAW retiree settlement agreement establishing the VEBA.
The company entered into the retiree settlement agreement with the UAW in connection with the sale of General Motors to a U.S. Treasury-sponsored purchaser.
Motors Liquidation said it has been making contributions to the VEBA but believes the amounts payable to the VEBA were fixed and capped at the amount and structure of the specific payments denominated in the UAW retiree settlement agreement.
Motors Liquidation said the UAW is basing its claim for the additional $450 million contribution on a separate and contingent alleged obligation contained in an agreement between the debtors, Delphi Corp. and the UAW that was entered into nearly two years before the UAW retiree settlement agreement.
Motors Liquidation believes any contingent obligation in that 2007 agreement calling for contributions to the VEBA has been superseded and extinguished by the terms of the new UAW retiree settlement, which limited the payments.
A hearing is scheduled for Nov. 9.
GM, a Detroit-based automaker, filed for bankruptcy on June 1, 2009. The new General Motors Corp. emerged from Chapter 11 on July 10, 2009, and Motors Liquidation's Chapter 11 case number is 09-50026.
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