General Motors Corp. was forced into bankruptcy during the Great Recession. An avoidance action was commenced seeking the return of nearly $1.5 billion used to pay off a term loan that had a large portion of the perfected security interest in certain collateral (fixtures and equipment) mistakenly canceled. A post-bankruptcy trust representing unsecured creditors led the avoidance action, arguing that the remaining collateral value was inadequate to secure the $1.5 billion loan. Thus, identifying and valuing the remaining collateral was essential in the determination of an equitable clawback of the $1.5 billion at stake.
The plaintiff engaged Stout as its primary expert to determine the scope and value of the collateral in dispute – over 250,000 of GM’s assets across more than 30 manufacturing and assembly plants. Stout provided review of thousands of discovery documents, inspection of eight multi-million square-foot manufacturing facilities, numerous depositions, an expert report, testimony during a two-week trial, rebuttal reports, and collaboration with other experts. In addition, we provided significant litigation support, including document management, deposition and mediation consulting, and case value modeling. Our work culminated in determining whether an asset was collateral, and, if it were collateral, what its value was considering multiple premises of value. We ultimately concluded the term loan was significantly under-secured.
After more than four years of active litigation, the parties reached a favorable settlement to our client that required the defendants to pay $231 million.