Sunday, 24 July 2016
Last updated 1 day ago
Oct 22 2013 | 12:47pm ET
Four hedge funds will get some of their legal bills stemming from a major General Motors settlement paid, a federal judge has ruled.
U.S. Bankruptcy Judge Robert Gerber in Manhattan approved the settlement between the hedge funds and other creditors of the former GM yesterday. Under the terms of the deal, the hedge funds—including Elliott Management, Fortress Investment Group and Paulson & Co.—agreed to drop $1.13 billion in claims against the old GM estate in exchange for holding on to $367 million they received in 2009 and $50 million from the "new" GM. The funds also get to hold on to $1.55 billion in claims against the old GM.
The settlement also included a provision giving the hedge funds an extra $1.5 billion to cover professional fees. Federal prosecutors in New York objected to that provision, but Gerber approved it.
Gerber said he has reviewed the deal despite lack of opposition to it, due to the "magnitude" of the "underlying controversy." The judge said he found the settlement reasonable.
Days before yesterday's hearing, Elliott and Paulson defended their fee request, noting that "the lawful pursuit of one's own interests in litigation does not preclude compensation" and that the deal offers "clear" benefits to "the remaining bankruptcy estate."