Bloomberg reports today, that U.S. Bankruptcy Judge Robert Gerber denied a bid to form an official bankruptcy committee by a group of dissident individual GM bondholders, at a hearing yesterday in the GM bankruptcy proceedings in Manhattan. .
"The individual bondholder group has three members with about $2.3 million of GM's $27 billion in bonds, though it represents a network of similarly situated investors holding about $500 million in GM debt, said their lawyer Michael Richman, of Washington-based Patton Boggs LLP."
Bloomberg also notes that "GM has said institutional bondholders, holding about 54 percent of the carmaker's bond debt, agreed May 31 to support the asset plan and to swap their debt for a 10 percent equity stake in the new company, plus warrants."
"There's been no showing this creditors' committee can't function," Gerber said, noting it was common for individual creditors to disagree with the actions of the committees that represent them.
In its motion for the appointment of an official committee, the individual bondholder group alludes to the question of whether the restructuring plan "is really supported even by a majority of the institutional bondholders, or by any of the non-institutional bondholders". The motion mentions "[m]edia accounts" of support for the plan and also points out that support for the plan "was reportedly tallied by various people through email and telephone calls."
The group also raises other unanswered questions in its motion:
Among other questions not yet answered is the extent to which the institutions that reportedly are supporting that plan received contemporaneous bailout funding from the Government, and otherwise engaged in hedging strategies in anticipation of the 'agreement,' which separately or together could mean that in economic substance their 'agreement' to the deal results in a far greater recovery to them than has been reported, and a far greater recovery to them than would be available to the other bondholders....
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