Prosecutors Scoff At Hedge Funds' GM Fees Request

Oct 15 2013 | 12:44pm ET

Four hedge funds' settlement with creditors of the former General Motors was anything but an altruistic deal to end "contentious, time-consuming and expensive litigation," federal prosecutors say.

The U.S. Attorney's Office in Manhattan has objected to the hedge funds' request for $1.5 million from the "old GM" estate to cover their legal fees. The prosecutors wrote that, far from making a "substantial contribution" to that estate, "they took self-interested steps to seek an advantageous resolution of their disputes with the estate."

The hedge funds, including Elliott Management, Fortress Investment Group and Paulson & Co., agreed to drop $1.13 billion in claims against old GM. But in exchange, they got to keep $367 million they received from GM Canada in 2009 and $50 million from the "new" GM, created in the wake of the company's bankruptcy and bailout by the federal government, in addition to more than $2 billion in outstanding claims against old GM.

A federal bankruptcy court will consider the hedge funds' request on Oct. 21.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of