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Bankruptcy Keyed to Epstein 6th Ed.
Campbell v. Motors Liquidation Co. (In re Motors Liquidation Co., et al. f/k/a General Motors Corp.)
Citation:
428 B.R. 43 (2010)Facts
General Motors Corporation faced severe financial distress and filed for Chapter 11 bankruptcy on June 1, 2009. Simultaneously, GM moved for approval of the sale of substantially all its assets to a Treasury-sponsored purchaser (New GM) pursuant to Section 363 of the Bankruptcy Code. The sale was structured to preserve the going-concern value of GM’s assets and business, with the Treasury providing over $19 billion in financing. The purchase price exceeded $90 billion in consideration.
The Master Sale and Purchase Agreement provided that New GM would not assume certain liabilities, including existing products liability claims, though it later agreed to assume future products liability claims. The agreement explicitly stated that New GM would not have entered into the transaction if the sale was not free and clear of all liens, claims, and other interests, including rights based on successor liability.
Appellants, who had pending products liability claims against GM, objected to the 363 Motion, arguing that Section 363(f) did not authorize a sale “free and clear” of their claims and that the Bankruptcy Court lacked subject matter jurisdiction to enjoin post-closing disputes between products liability claimants and New GM.
On July 5, 2009, the Bankruptcy Court approved the 363 Transaction over objections. The Sale Order included provisions authorizing the sale free and clear of existing products liability claims and enjoining successor liability claims against New GM. The Bankruptcy Court found that the Purchaser was a good faith purchaser.
Although the Asbestos Committee (another group of objectors) sought a stay of the Sale Order, Appellants did not. The 363 Transaction closed in July 2009. Appellants then appealed the Sale Order to the District Court.
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