The General Motors logo is seen outside its
headquarters at the Renaissance Center in Detroit, Michigan in this file
photograph taken August 25, 2009.
(Reuters)
- The Delaware Supreme Court said on Friday that creditors are entitled
to rely on formal loan documents authorized by secured lenders, even if
there is a mistake in the documents.
The court was responding to a
question from a New York federal appeals court relating to a dispute
between creditors of General Motors (GM.N) before its 2009 bankruptcy and its former lender, JPMorgan Chase & Co (JPM.N).
The issue relates to GM's insolvency, in which its healthy assets were sold to the new General Motors Co, while the rest were liquidated for the benefit of unsecured creditors.
GM's unsecured creditors' committee claimed JPMorgan and other holders of a syndicated $1.5 billion term loan extinguished their lien on GM's assets, freeing up the assets to unsecured creditors. JPMorgan said neither it nor GM intended to nix the lien.
"Parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender intends the plain consequences of its filing," the court said in it opinion.
JPMorgan and GM could not immediately be reached for
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Credit: Reuters/Jeff Kowalsky/Files
The issue relates to GM's insolvency, in which its healthy assets were sold to the new General Motors Co, while the rest were liquidated for the benefit of unsecured creditors.
GM's unsecured creditors' committee claimed JPMorgan and other holders of a syndicated $1.5 billion term loan extinguished their lien on GM's assets, freeing up the assets to unsecured creditors. JPMorgan said neither it nor GM intended to nix the lien.
"Parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender intends the plain consequences of its filing," the court said in it opinion.
JPMorgan and GM could not immediately be reached for
Read more
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