DOCSLIB.ORG

BINDER & SCHWARTZ LLP Eric B. Fisher Neil S. Binder Lindsay A

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
BINDER & SCHWARTZ LLP Eric B. Fisher Neil S. Binder Lindsay A 09-00504-mg Doc 994 Filed 05/25/17 Entered 05/25/17 23:56:33 Main Document Pg 1 of 498 BINDER & SCHWARTZ LLP Eric B. Fisher Neil S. Binder Lindsay A. Bush Lauren K. Handelsman 366 Madison Avenue, 6th Floor New York, New York 10017 Telephone: (212) 510-7008 Facsimile: (212) 510-7299 Attorneys for the Motors Liquidation Company Avoidance Action Trust UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------------------x In re: Chapter 11 MOTORS LIQUIDATION COMPANY, f/k/a GENERAL MOTORS CORPORATION, et al., Case No. 09-50026 (MG) (Jointly Administered) Debtors. -----------------------------------------------------------------------x MOTORS LIQUIDATION COMPANY AVOIDANCE ACTION TRUST, by and through the Wilmington Trust Company, solely in its capacity as Trust Administrator and Trustee, Adversary Proceeding Plaintiff, Case No. 09-00504 (MG) against JPMORGAN CHASE BANK, N.A., et al., Defendants. -----------------------------------------------------------------------x PLAINTIFF’S POST-TRIAL BRIEF 09-00504-mg Doc 994 Filed 05/25/17 Entered 05/25/17 23:56:33 Main Document Pg 2 of 498 TABLE OF CONTENTS PRELIMINARY STATEMENT .................................................................................................... 1 PROPOSED FINDINGS OF FACT ............................................................................................... 7 I. OLD GM AND ITS SUPPLIERS....................................................................................... 7 II. THE TERM LOAN TO OLD GM...................................................................................... 8 III. OLD GM WAS FAILING PRIOR TO ITS BANKRUPTCY .......................................... 11 A. Various Factors Contributed to Old GM’s Distress .............................................. 12 B. Old GM Could No Longer Operate as a Going Concern by June 2009 ............... 13 C. Contemporaneous Market Securities’ Prices Are Consistent with the Conclusion that Old GM Was Failing .................................................................. 14 D. Contemporaneous Analyses by Industry Analysts and Credit Ratings Agencies Are Consistent with the Conclusion that Old GM Was Failing............................ 18 E. Statements by Government Officials and Agencies Confirm that Old GM Was Failing ................................................................................................................... 22 IV. OLD GM TRIED, BUT FAILED, TO SOLVE ITS PROBLEMS THROUGH MARKET MEANS ........................................................................................................... 26 V. THE GOVERNMENT BAILOUT ................................................................................... 30 VI. THE GOVERNMENT’S ACTIONS WERE MOTIVATED BY NON-MARKET FACTORS......................................................................................................................... 40 VII. OLD GM’S BANKRUPTCY PROCEEDINGS AND REPAYMENT OF THE TERM LOAN ................................................................................................................... 48 VIII. THE AVOIDANCE ACTION .......................................................................................... 52 IX. SCOPE OF THE GRANT OF COLLATERAL ............................................................... 55 A. Representative Asset Numbers 11, 32, and 33 Are Not Within the Grant of Collateral ............................................................................................................... 55 B. The Eaton County Fixture Filing Does Not Perfect Defendants’ Security Interest in Any Assets Found to Be Fixtures at Lansing Regional Stamping or Lansing Delta Township ..................................................................................................... 59 ii 09-00504-mg Doc 994 Filed 05/25/17 Entered 05/25/17 23:56:33 Main Document Pg 3 of 498 C. Powertrain Engineering Pontiac Is Not A Related Facility And Is Therefore Excluded From the Grant of Collateral ................................................................. 67 X. THIRD-PARTY EVIDENCE RELEVANT TO THE FIXTURE CLASSIFICATION ISSUE ............................................................................................................................... 69 A. SALES OF GM ASSETS BY MAYNARDS AND HILCO ................................ 70 1. The Sales Process ...................................................................................... 71 2. Removal of Assets from the GM Facilities............................................... 73 3. The State of the Automotive Equipment Market in 2009 ......................... 74 4. The Asset Sales on Behalf of RACER Trust ............................................ 75 5. The Marketing Efforts by Maynards/Hilco............................................... 77 6. Documentation Regarding the Asset Sales ............................................... 79 7. Maynards’ Continued Work for GM ........................................................ 81 B. GM’S TREATMENT OF ITS FIXED ASSETS .................................................. 82 1. GM Has Various Policies and Procedures in Place Relating to the Movement of Fixed Assets ....................................................................... 84 2. GM Regularly Changes Its Manufacturing Assets Due to Product and Model Changes ......................................................................................... 85 3. Plant Closings Were a Frequent Occurrence in the Automotive Industry 88 4. GM’s Tax Classification of its Fixed Assets ............................................ 89 XI. MR. GOESLING’S APPROACH TO FIXTURE CLASSIFICATION ........................... 92 A. Mr. Goesling’s Background and Experience ........................................................ 92 B. Mr. Goesling’s Analysis of Relevant Data ........................................................... 95 C. GM’s Fixed Asset Ledger (eFAST) ...................................................................... 96 D. Transfer Analysis .................................................................................................. 97 E. Retirement Analysis .............................................................................................. 98 F. Auction Analysis ................................................................................................. 103 G. Tax Analysis ....................................................................................................... 104 iii 09-00504-mg Doc 994 Filed 05/25/17 Entered 05/25/17 23:56:33 Main Document Pg 4 of 498 XII. DEFENDANTS’ ASSET CLASSIFICATION EXPERTS FAILED TO LOOK AT OBJECTIVE FACTORS ................................................................................................ 106 XIII. BASED ON THE OBJECTIVE FACTS, 36 OF THE 40 REPRESENTATIVE ASSETS ARE NOT FIXTURES ................................................................................................... 107 A. The Representative Assets in Ohio Are Not Fixtures Because They Are Not Essential to the Use of the Realty ....................................................................... 107 1. The Representative Assets at Defiance Are Not Fixtures Because They Are Not Essential to the Use of the Realty ............................................. 108 a. 100 Ton Vertical Channel Holding Furnace (Representative Asset No. 28) ........................................................................................ 109 b. CB 91 Robot (Representative Asset No. 39) .............................. 112 c. P&H 7 ½ Ton Charger Crane 6E Cupola (Representative Asset No. 40) ............................................................................................... 115 d. Core Delivery Conveyor System CB 116 & 122 (Representative Asset No. 26) .............................................................................. 118 e. Emissions System #4 Cupola (Representative Asset No. 27)..... 121 f. System Gas Cleaning No. 4 Cupola (Representative Asset No. 38) ..................................................................................................... 124 2. Representative Asset No. 30, the Transfer Press that Was Sold Out of Mansfield Stamping, Is Not a Fixture ..................................................... 125 B. 29 of the 33 Representative Assets Located in Michigan Are Not Fixtures ....... 126 1. The Stamping Presses Among The Representative Assets Are Not Fixtures ................................................................................................................. 127 a. Press Background Information ................................................... 127 i. Despite the Cost and Relative Difficulty, Presses Are Consistently Moved ........................................................ 129 ii. Presses Are Frequently Retired Before the End of their Useful Lives .................................................................... 132 iii. GM Has Treated Presses As Personal Property .............. 133 iv. There is a Secondary Market for Presses ........................ 133 v. Presses Are Never Abandoned in Place .......................... 134 iv 09-00504-mg Doc 994 Filed 05/25/17 Entered 05/25/17 23:56:33 Main Document Pg 5 of 498 b. Leased Press Assets .................................................................... 135 i. AA-11 Schuler No. 1 AA Crossbar Transfer Press (Representative Asset No. 32) ........................................ 135 ii. B3-5 Transfer Press System Incl. Destacker and End of
Load more

Recommended publications
  • The $1.5 Billion General Motors Recalls at the Dangerous Intersection of Chapter 11, Article 9, and TARP
    University of Cincinnati Law Review Volume 85 Issue 1 Article 4 August 2018 The $1.5 Billion General Motors Recalls at the Dangerous Intersection of Chapter 11, Article 9, and TARP Sally McDonald Henry Follow this and additional works at: https://scholarship.law.uc.edu/uclr Recommended Citation Sally McDonald Henry, The $1.5 Billion General Motors Recalls at the Dangerous Intersection of Chapter 11, Article 9, and TARP, 85 U. Cin. L. Rev. (2018) Available at: https://scholarship.law.uc.edu/uclr/vol85/iss1/4 This Article is brought to you for free and open access by University of Cincinnati College of Law Scholarship and Publications. It has been accepted for inclusion in University of Cincinnati Law Review by an authorized editor of University of Cincinnati College of Law Scholarship and Publications. For more information, please contact [email protected]. Henry: The $1.5 Billion General Motors Recalls THE $1.5 BILLION GENERAL MOTORS RECALLS AT THE DANGEROUS INTERSECTION OF CHAPTER 11, ARTICLE 9, AND TARP Sally McDonald Henry* I. INTRODUCTION: THE COMPACT VERSION This article discusses how, in the General Motors Corporation (General Motors or GM)1 chapter 11 case, a group of creditors—mostly collateralized loan obligations, hedge funds, pension, and other funds2— (the Funds or the Lenders3) were paid in full, in cash, even though they had no right to the payment, which amounted to almost $1.5 billion. Not only were the Funds paid in full, but in addition, their collateral agent, JPMorgan Chase Bank, N.A. (JPMorgan), is being reimbursed for millions of dollars of legal fees, even though it has no legal right to the reimbursement.4 These improper payments occurred (and continue to occur) even though many other creditors—unsecured bondholders,5 tort creditors, mom and pop business whose existence depend on being paid * Associate Professor, Texas Tech School of Law.
    [Show full text]
  • Printmgr File
    March 27, 2014 Dear Stockholder: You are cordially invited to attend the 2014 Annual Meeting of Stockholders of SunCoke Energy, Inc., on Thursday, May 8, 2014 at 9:00 a.m., local time, at the Hotel Arista, 2139 CityGate Lane, Naperville, Illinois 60563. The following pages contain our notice of annual meeting and proxy statement. Please review this material for information concerning the business to be conducted at the 2014 Annual Meeting, including the nominees for election as directors. As we have in the past, we are furnishing our proxy statement and other proxy materials to our stockholders over the Internet and mailing paper copies to stockholders who have requested them. For further details, please refer to the section entitled About the Annual Meeting beginning on page 1 of the proxy statement. Whether or not you plan to attend the 2014 Annual Meeting, it is important that your shares be represented. Please vote via telephone, the Internet, proxy card, or voter instruction form. Thank you for your support of SunCoke Energy. Sincerely, Frederick A. Henderson Chairman and Chief Executive Officer SunCoke Energy, Inc. | 1011 Warrenville Road | Suite 600 | Lisle, Illinois 60532 | tel (630) 824-1000 www.suncoke.com Notice of Annual Meeting of Stockholders to be held on May 8, 2014 The 2014 Annual Meeting of Stockholders of SunCoke Energy, Inc. will be held on Thursday, May 8, 2014 at 9:00 a.m., local time, at the Hotel Arista, 2139 CityGate Lane, Naperville, Illinois 60563, for the following purposes: 1. To elect two directors, Robert J. Darnall and James E.
    [Show full text]
  • U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring
    U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring Bill Canis, Coordinator Specialist in Industrial Organization and Business James M. Bickley Specialist in Public Finance Hinda Chaikind Specialist in Health Care Financing Carol A. Pettit Legislative Attorney Patrick Purcell Specialist in Income Security Carol Rapaport Analyst in Health Care Financing Gary Shorter Specialist in Financial Economics May 29, 2009 Congressional Research Service 7-5700 www.crs.gov R40003 CRS Report for Congress Prepared for Members and Committees of Congress U.S. Motor Vehicle Industry: Federal Financial Assistance and Restructuring Summary In the past year, the U.S. auto industry has been severely buffeted by three adverse factors: soaring gasoline prices caused motorists to focus more on fuel efficiency; economic recession and growing unemployment reduced demand for new autos; and the near collapse of the commercial credit markets made auto purchases more difficult. These economic currents led Chrysler to file for bankruptcy at the end of April and prompted General Motors to suggest that it may follow suit on June 1, 2009. General Motors, Chrysler, and Ford—the Detroit 3—have seen an historic decline in sales; most foreign manufacturers have seen a steady erosion as well. During the first four months of 2009, year over year sales of North American-produced (i.e., domestic) vehicles by Chrysler, GM, and Ford declined by 61%, 49%, and 35%, respectively, while Nissan, Toyota, and Honda sales of domestic vehicles fell by 32%, 28%, and 26%, respectively. Toyota posted its first annual net loss since 1950. GM and Chrysler had the weakest financial base as the recession and credit crisis deepened, leading them to seek federal assistance for restructuring plans.
    [Show full text]
  • 8M OK'd for DRIC Design Work
    20090921-NEWS--0001-NAT-CCI-CD_-- 9/18/2009 6:51 PM Page 1 ® www.crainsdetroit.com Vol. 25, No. 37 SEPTEMBER 21 – 27, 2009 $2 a copy; $59 a year ©Entire contents copyright 2009 by Crain Communications Inc. All rights reserved Page 3 Blue Cross loss: Investment income can’t save the day Stem cell summit in Detroit? Repair work revs up at Cobo in preparation for auto show Prop. 2, TechTown labs among selling points BY TOM HENDERSON the fifth annual, begins today in sons to bring the summit to Michi- Inside CRAIN’S DETROIT BUSINESS Baltimore, in conjunction with gan, not the least of which is the Johns Hopkins University. passage of the stem cell proposal Stormy weather forecast It’s likely the 2010 World Stem “It’s not set in stone, yet, but De- last year,” said Siegel, referring to Cell Summit will be held next Octo- troit is strongly under considera- Proposal 2, which allowed stem over aerotropolis, ber in Detroit, with more than tion,” said Bernie Siegel, executive cell research in Michigan. 1,200 scientists, researchers, gov- director of the Florida-based Genet- Siegel said the official an- Page 26 DUSTIN WALSH/CRAIN’S DETROIT BUSINESS ernment officials and representa- ics Policy Institute, the nonprofit or- nouncement will be made soon af- Danny Heumann (left) and Jim Eliason tives of private industry from ganization that puts on the sum- ter this week’s summit, following a are assistant director and director, Focus: Business Education more than 25 counties in atten- mit. The conference is tentatively vote of the institute’s board.
    [Show full text]
  • Master Transaction Agreement,45 Were As Follows
    Congressional Oversight Panel September 9, 2009 SEPTEMBER OVERSIGHT REPORT* The Use of TARP Funds in the Support and REPORTReorganization of the* Domestic Automotive Industry *Submitted under Section 125(b)(1) of Title 1 of the Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343 Table of Contents Executive Summary .............................................................................................................3 Section One: The Use of TARP Funds in the Support and Reorganization of the Domestic Automotive Industry..........................................................6 A. Introduction ..............................................................................................................6 B. What Happened? The Sequence of Events .............................................................7 C. The Impact of the Reorganizations: Who Got What? ............................................23 D. Treasury‟s Objectives: What was Treasury Trying to Achieve? ...........................32 E. Bankruptcy Law Aspects of the Automotive Company Rescues ..........................40 F. Following the Money .............................................................................................53 G. Issues Raised ..........................................................................................................70 H. Conclusion and Recommendations ......................................................................110 Annexes: A. Professor Adler ....................................................................................................116
    [Show full text]
  • 2013 Honors Convocation Program
    PHILIP J. HANLON PROVOST AND EXECUTIVE VICE PRESIDENT FOR ACADEMIC AFFAIRS 3074 FLEMING ADMINISTRATION BUILDING 503 THOMPSON STREET ANN ARBOR, MI 48109-1340 Honored Students Honored Faculty Faculty Colleagues and Friends of the University It is a pleasure to welcome you to the 90th University of Michigan Honors Convocation. On behalf of the academic leaders on the Ann Arbor, Dearborn, and Flint campuses, I thank you for joining us today. Honors Convocation provides us with the opportunity to recognize and celebrate the outstanding academic achievements of undergraduate students from all three of our campuses. It is one of my favorite events each year and has become an important University tradition. Today we honor students who exemplify academic excellence, committed and creative leadership, and thoughtful service—all core values of the University. These students have demonstrated a passion for learning—challenging themselves and their teachers with tough questions and innovative ideas that stretch the boundaries of knowledge and open new pathways for exploration. The University’s mission states our commitment to “developing leaders who will challenge the present and enrich the future.” The students we honor today give life to that commitment through their purposeful engagement with the world. Today we also honor a group of distinguished faculty members who have joined us for this ceremony. Recently recognized by the University for their outstanding teaching and scholarship, they represent the many individuals in our community who inspire, challenge, and support our students. As we congratulate our students, we also recognize, with deep appreciation, the parents, family members, and friends who have nurtured and supported these remarkable students.
    [Show full text]
  • 2014 Honors Convocation Program
    91ST ANNUAL HONORS CONVOCATION Hill Auditorium March 16, 2014 | 2:00 p.m. This year marks the 91st Honors Convocation held at the University of Michigan since the first was instituted on May 13, 1924, by President Marion LeRoy Burton. On these occasions the University publicly recognizes and commends the undergraduate students in its schools and colleges who have earned distinguished academic records or have excelled as leaders in the community. It is highly appropriate that those students be honored who have most clearly and effectively demonstrated academic excellence, dynamic leadership, and inspirational volunteerism. Honors Convocation takes rank with the commencement exercises among the important ceremonies of the University year. The names of the students who are honored for outstanding achievement this year appear in this program. They include all students who have earned University Honors in both Winter 2013 and Fall 2013, plus all seniors who have earned University Honors in either Winter 2013 or Fall 2013. The William J. Branstrom Freshman Prize recipients are listed, as well— recognizing first year undergraduate students whose academic achievement during their first semester on campus place them in the upper five percent of their school or college class. James B. Angell Scholars—students who receive all “A” grades over consecutive terms—are given a special place in the program. In addition, the student speaker is recognized individually for exemplary contributions to the University community. To all honored students, and to their parents, the University extends its hearty congratulations. Honored Students Honored Faculty Faculty Colleagues and Friends of the University It is a pleasure to welcome you to the 91st University of Michigan Honors Convocation.
    [Show full text]
  • Big Trouble for the Big Three: an Audience Perspective of The
    BIG TROUBLE FOR THE BIG THREE: AN AUDIENCE PERSPECTIVE OF THE APPROPRIATENESS AND EFFECTIVENESS OF THE BIG THREE AUTOMAKERS’ IMAGE REPAIR STRATEGIES Lindsey B. Anderson Submitted to the faculty of the University Graduate School in partial fulfillment of the requirements for the degree Master of Arts in the Department of Communication Studies, Indiana University May 2010 Accepted by the Faculty of Indiana University, in partial fulfillment of the requirements for the degree of Master of Arts. John Parrish-Sprowl, Ph.D., Chair Kristina Horn Sheeler, Ph.D. Master’s Thesis Committee Ronald Sandwina, Ph.D. ii DEDICATION To Robert for always believing in me. You have inspired me to become a better person and I cannot thank you enough for the encouragement and love that you have provided. To my mother and father for supporting me through all of my dreams and continually emphasizing the importance of an education. Finally, to Kate for listening to my frustrations and always helping me put my priorities into perspective. iii ACKNOWLEDGEMENTS I would like to thank my thesis chair, Dr. John Parrish-Sprowl, for his support and encouragement throughout graduate school and especially during the thesis process. I would also like to thank Dr. Kristina Horn Sheeler for introducing me to image repair strategies and providing the foundation for my final thesis topic. Finally, I would like to thank Dr. Ronald Sandwina for agreeing to be on my committee and providing invaluable advice throughout the process. In addition, I would like to thank Rachel, Emily and Jon for being the best cohort ever.
    [Show full text]