Motors Liquidation Co. v. JPMorgan Chase Bank, N.A. (In re Motors Liquidation Co.)
| Decision Date | 26 September 2017 |
| Docket Number | Adversary Proceeding Case No. 09–00504 (MG),Case No. 09–50026 (MG) (Jointly Administered) |
| Citation | 576 B.R. 325 |
| Parties | IN RE: MOTORS LIQUIDATION COMPANY, f/k/a General Motors Corporation, et al., Debtors. Motors Liquidation Company Avoidance Action Trust, by and through the Wilmington Trust Company, solely in its capacity as Trust Administrator and Trustee, Plaintiff, v. JPMorgan Chase Bank, N.A., et al., Defendants. |
| Court | U.S. Bankruptcy Court — Southern District of New York |
WACHTELL, LIPTON, ROSEN & KATZ, Attorneys for Defendant and Cross–Claim Defendant JPMorgan Chase Bank, N.A., 51 West 52nd Street, New York, New York, 10019 By: Harold S. Novikoff, Esq., Marc Wolinsky, Esq., Amy R. Wolf, Esq., Emil A. Kleinhaus, Esq., Carrie M. Reilly, Esq., C. Lee Wilson, Esq., KELLEY DRYE & WARREN LLP, 101 Park Avenue, New York, New York 10178, By: John M. Callagy, Esq., Nicholas J. Panarella, Esq.,
BINDER & SCHWARTZ LLP, Attorneys for Plaintiff, 28 W. 44th Street, Suite 700, New York, New York 10036–4039, By: Eric B. Fisher, Esq., Neil S. Binder, Esq., Lindsay A. Bush, Esq., Lauren K. Handelsman, Esq.
1. Market Value Does Not Include the Amount of any Government Subsidy...424
The Defendants are a group of Old GM's creditors referred to as the Term Lenders, who initially held a security interest in approximately $1.5 billion of Old GM's assets, with a perfected security interest resulting from a UCC–1 Statement filed in Delaware. In earlier stages of this litigation (described below), the perfected security interest of the Term Lenders resulting from the Delaware UCC–1 filing was terminated when a UCC–3 Termination Statement was mistakenly filed in Delaware. Despite the filing of the UCC–3 Termination Statement in Delaware, the Defendants allege that, at the time of the 363 Sale they held a perfected security interest in over 200,000 fixtures at GM plants because of twenty-six Fixture Filings in counties where disputed assets were located. The Defendants argue that these fixtures should be valued according to their replacement cost new less depreciation, as part of a going-concern business. The Avoidance Action Trust, on behalf of Old GM's unsecured creditors, disputes whether most of these assets are indeed fixtures, and if they were, it argues that they should be valued at their liquidation value.
It is impractical, to say the least, to litigate issues with respect to each of the over 200,000 disputed assets. Therefore, in pretrial proceedings, the Court directed the parties to designate forty representative assets to be the subject of this trial. The Court indicated that it would issue an opinion regarding which assets are fixtures and how to value them. The parties agreed that after the issuance of this Opinion, they would attempt to settle as to the remaining disputed assets. In an effort to provide guidance to the parties in resolving the remaining disputes, the Court includes extensive factual detail in this Opinion. Where possible, the Court has articulated broad principles of both fixture and valuation law to serve as guiding principles for the more than 200,000 assets that remain in dispute.
The representative forty assets were located at General Motors facilities in Michigan and Ohio. Disputed assets were located in other states as well, but the disagreement between the Plaintiff and Defendants touches on the fundamental nature of manufacturing assets located at GM's plants: which ones were "fixtures" that remained subject to the Term Lenders' perfected security...
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