1
00:00:00,160 --> 00:00:03,040
Speaker 1: When General Motors came out of bankruptcy in two thousand nine,

2
00:00:03,120 --> 00:00:05,680
Speaker 1: it left behind a shell of its old self. The

3
00:00:05,760 --> 00:00:08,959
Speaker 1: shell known as Old GM, was set up to handle

4
00:00:09,039 --> 00:00:12,960
Speaker 1: lingering legal claims, including lawsuits over faulty ignition switches. The

5
00:00:13,000 --> 00:00:16,560
Speaker 1: financial arrangements. However, we're complicated, and over the past week

6
00:00:16,800 --> 00:00:20,600
Speaker 1: they fostered a billion dollar disagreement. First, New GM, that's

7
00:00:20,640 --> 00:00:23,599
Speaker 1: the company that still makes cars, accused Old GM of

8
00:00:23,640 --> 00:00:27,160
Speaker 1: secretly plotting with with plaintiff's attorneys to extract more money

9
00:00:27,200 --> 00:00:30,400
Speaker 1: from the automaker. Now New GM has reached a deal

10
00:00:30,520 --> 00:00:33,920
Speaker 1: with Old GM, and that has plaintiffs lawyers crying foul.

11
00:00:34,600 --> 00:00:36,960
Speaker 1: With us. To help explain all of this is Eric Gordon.

12
00:00:37,280 --> 00:00:39,600
Speaker 1: He's a professor at the University of Michigan's Ross School

13
00:00:39,600 --> 00:00:43,239
Speaker 1: of Business and he's with us in our Chicago studio. Eric,

14
00:00:43,280 --> 00:00:45,720
Speaker 1: thanks for being with us. UM. This is kind of

15
00:00:45,760 --> 00:00:49,440
Speaker 1: complicated stuff, So just start, if you would, by explaining

16
00:00:49,479 --> 00:00:53,320
Speaker 1: exactly what old GM is and what its obligations and

17
00:00:53,320 --> 00:00:56,680
Speaker 1: and motivations are. Old GM is a creature of the

18
00:00:56,720 --> 00:01:02,120
Speaker 1: bankruptcy reorganization. In In that reorganization, GM is basically split

19
00:01:02,160 --> 00:01:06,520
Speaker 1: into two pieces. Old GM now referred to as the trust.

20
00:01:07,160 --> 00:01:10,360
Speaker 1: UM got a certain amount of money, a lot of money,

21
00:01:10,360 --> 00:01:13,319
Speaker 1: billions of dollars, and some property. It got some old

22
00:01:13,400 --> 00:01:17,320
Speaker 1: plants and some property, and it's a liquidating trust. It's

23
00:01:17,400 --> 00:01:21,160
Speaker 1: designed to pay off the obligations that had to be

24
00:01:21,160 --> 00:01:25,360
Speaker 1: paid off under the agreement, the bankruptcy agreement. New GM,

25
00:01:25,560 --> 00:01:27,360
Speaker 1: or what you and I think of as GM today,

26
00:01:27,480 --> 00:01:32,720
Speaker 1: got spun off as supposedly a clean, new, fresh start entity.

27
00:01:33,120 --> 00:01:36,440
Speaker 1: That's the purpose of bankruptcy reorganization UM, so that you

28
00:01:36,480 --> 00:01:38,880
Speaker 1: know it could still make cars and still employ people.

29
00:01:39,440 --> 00:01:43,959
Speaker 1: Turns out it hasn't been one fresh start. There's some

30
00:01:44,480 --> 00:01:48,640
Speaker 1: there's some dangling kind of threads here, UM, including the

31
00:01:49,200 --> 00:01:55,000
Speaker 1: billion dollar thread you mentioned Eric. Last week, we understood

32
00:01:55,160 --> 00:01:59,680
Speaker 1: and there was a report that GM had old GM,

33
00:01:59,760 --> 00:02:04,960
Speaker 1: that trust had settled with plaintiffs lawyers. What happened? Yeah,

34
00:02:05,000 --> 00:02:09,440
Speaker 1: So apparently apparently the old GM, the trust, and the

35
00:02:09,480 --> 00:02:13,880
Speaker 1: plaintiffs lawyers, who have you been involved in some lengthy

36
00:02:13,880 --> 00:02:18,079
Speaker 1: settlement negotiations over some big big bucks got together and

37
00:02:18,160 --> 00:02:21,920
Speaker 1: finally hammered out a deal they were happy with. They

38
00:02:22,000 --> 00:02:28,359
Speaker 1: being those two old GM and the plaintiffs lawyers. Apparently

39
00:02:28,880 --> 00:02:32,800
Speaker 1: UM New GM was not involved in that wasn't part

40
00:02:32,840 --> 00:02:38,120
Speaker 1: of the negotiations. UH and found out that as part

41
00:02:38,160 --> 00:02:41,480
Speaker 1: of those negotiations, the two parties, Old GM and the

42
00:02:41,480 --> 00:02:44,800
Speaker 1: trust O g M and the plans managed to hammer

43
00:02:44,840 --> 00:02:47,720
Speaker 1: out a deal which pulls one of those threads, the

44
00:02:47,840 --> 00:02:53,000
Speaker 1: billion dollar thread UM and GM. New GM is not

45
00:02:53,320 --> 00:02:55,960
Speaker 1: happy about that for a number of reasons. I mean,

46
00:02:55,960 --> 00:02:58,360
Speaker 1: maybe for a billion reasons, but for some you know,

47
00:02:58,480 --> 00:03:01,880
Speaker 1: very specific reasons. And so now we have a new

48
00:03:01,919 --> 00:03:04,840
Speaker 1: agreement that I guess maybe supersedes the old old agreement.

49
00:03:04,880 --> 00:03:08,520
Speaker 1: This is between new GM and old GM. Tell us

50
00:03:08,560 --> 00:03:12,600
Speaker 1: about about that. So the old agreement apparently was never signed,

51
00:03:12,639 --> 00:03:17,079
Speaker 1: certainly wasn't approved by the court. UM New GM voiced

52
00:03:17,240 --> 00:03:21,280
Speaker 1: in some very strong words, it's disapproval of that agreement,

53
00:03:21,919 --> 00:03:24,680
Speaker 1: and it's a disapproval of the conduct of both the

54
00:03:24,680 --> 00:03:30,360
Speaker 1: plaintiffs lawyers and old GM in reaching it. Apparently got

55
00:03:30,400 --> 00:03:35,400
Speaker 1: together with old GM. Um and made its displeasure clear,

56
00:03:35,920 --> 00:03:38,520
Speaker 1: but also made Old GM and offer it didn't want

57
00:03:38,520 --> 00:03:43,040
Speaker 1: to refuse, which is UM. Look, we will UH cover

58
00:03:43,440 --> 00:03:48,480
Speaker 1: legal feest to litigate some issues we New GM want

59
00:03:48,520 --> 00:03:51,640
Speaker 1: to have litigated. You weren't going to litigate them. Who

60
00:03:51,680 --> 00:03:55,080
Speaker 1: knows why GM suspects there was a little sort of

61
00:03:55,120 --> 00:03:57,640
Speaker 1: hand holding between old GM and the plaintiffs, but even

62
00:03:57,680 --> 00:04:00,400
Speaker 1: if not, maybe old GM just didn't want to spend

63
00:04:00,400 --> 00:04:02,839
Speaker 1: the money. So new GM said, Okay, we'll here, we'll

64
00:04:02,840 --> 00:04:05,800
Speaker 1: bring something to the table. We'll cover some legal fees.

65
00:04:06,120 --> 00:04:10,080
Speaker 1: And under this new agreement between old and new GM,

66
00:04:10,360 --> 00:04:13,280
Speaker 1: this time the plaintiffs lawyers are left out. Um, new

67
00:04:13,320 --> 00:04:15,760
Speaker 1: GM is going to cover some legal fees and apparently

68
00:04:15,840 --> 00:04:19,720
Speaker 1: all GM is going to litigate some defenses that the

69
00:04:19,760 --> 00:04:22,880
Speaker 1: GM hopes will prevail and keep it from having to

70
00:04:22,920 --> 00:04:26,560
Speaker 1: pay that billion dollars. Eric, I understand the judge scolded

71
00:04:26,640 --> 00:04:30,120
Speaker 1: all the lawyers on on all the sides out of hearing.

72
00:04:30,560 --> 00:04:35,520
Speaker 1: Why ye, Well, for two reasons. One, judges like settlements,

73
00:04:36,560 --> 00:04:39,880
Speaker 1: especially settlements that have been you know, underway for quite

74
00:04:39,920 --> 00:04:43,960
Speaker 1: a long time. You'll walk into a judge's courtroom at

75
00:04:43,960 --> 00:04:47,480
Speaker 1: the last minute and say, oaps, look the settlement that

76
00:04:47,480 --> 00:04:50,720
Speaker 1: we've been working on forever. Uh, nope, we've got We've

77
00:04:50,720 --> 00:04:53,839
Speaker 1: got something new. So so Judge Glenn. Judge Glenn, like

78
00:04:53,920 --> 00:04:57,520
Speaker 1: any judge, is not happy about that. But the plaintiffs lawyers,

79
00:04:58,000 --> 00:05:00,920
Speaker 1: a plaintiffs lawyer at least ed wise fell in there,

80
00:05:01,480 --> 00:05:05,200
Speaker 1: Um referred to, well, it must have been the result

81
00:05:05,360 --> 00:05:09,159
Speaker 1: of threats, some pretty heavy duty threats that GM made,

82
00:05:09,360 --> 00:05:12,760
Speaker 1: New GM made to old GM. Um. He did admit

83
00:05:12,800 --> 00:05:15,840
Speaker 1: that he doesn't know that those threats exist, but but

84
00:05:15,920 --> 00:05:19,320
Speaker 1: he he said that sort of they must have. So

85
00:05:19,400 --> 00:05:22,520
Speaker 1: the judge got pretty angry about that and has ordered

86
00:05:22,560 --> 00:05:26,479
Speaker 1: both sides to produce evidence that there were or were

87
00:05:26,480 --> 00:05:30,520
Speaker 1: not threats. Um so that the judge, you know, and

88
00:05:30,680 --> 00:05:32,760
Speaker 1: they just just blew up into Judge's face and he

89
00:05:32,920 --> 00:05:35,080
Speaker 1: is not a happy guy. We're gonna have to leave

90
00:05:35,080 --> 00:05:36,800
Speaker 1: it there, Thank you so much. Eric Gordon and the

91
00:05:36,839 --> 00:05:39,720
Speaker 1: professor at the University of Michigan's Ross School of Business.

92
00:05:39,720 --> 00:05:42,160
Speaker 1: Coming up on Bloomberg Law legal victory for Uber as

93
00:05:42,160 --> 00:05:44,359
Speaker 1: it tries to keep a price fixing suit out of court.