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