JPMorgan loses feud with GM creditors
JPMorgan Chase & Co. lost a court fight with creditors of General Motors Co.’s bankrupt predecessor over a $1.5 billion loan by accidentally giving up its rights as a bank lender.
In a case entering its sixth year, creditors of GM’s predecessor sought a ruling that JPMorgan gave up its rights to collateral securing a loan so that they can divvy up the assets themselves. JPMorgan says it didn’t mean to surrender its rights and argues it retains a secured interest.
The U.S. Court of Appeals in Manhattan on Wednesday sided with the creditors, saying the New York-based bank had authorized the filing of a document that canceled its right to the security and couldn’t retroactively change it. The ruling reverses a 2013 decision by U.S. Bankruptcy Judge Robert Gerber.
“We’re still reviewing the decision and looking at our options,” Andrew Gray, a spokesman for JPMorgan, said in an interview Wednesday.
GM’s forerunner, saddled with inferior assets after the automaker’s 2009 bankruptcy and U.S. bailout, has little money left to pay creditors. JPMorgan’s collateral might add a small amount, creditors have said.
The case is Official Committee of Unsecured Creditors of Motors Liquidation Co. v. JPMorgan Chase Bank NA, 13-2187, U.S. Court of Appeals for the Second Circuit (Manhattan).