Motors Liquidation Company

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
:
In re 	: 	Chapter 11
:
MOTORS LIQUIDATION COMPANY, et al., 	: 	09-50026 (REG)
f/k/a General Motors Corp., et al. 	:
:
Debtors. 	: 	(Jointly Administered)
:
---------------------------------------------------------------x
BENCH DECISION 1 ON OBJECTIONS TO
CONFIRMATION
APPEARANCES:
WEIL, GOTSHAL & MANGES LLP
Attorneys for Debtors and Debtors in Possession
767 Fifth Avenue
New York, New York 10153
By: 	Harvey R. Miller, Esq.
Stephen Karotkin, Esq. (argued)
Joseph H. Smolinsky, Esq. (argued)
Michele J. Meises, Esq.
Pablo Falabella, Esq.
1300 Eye Street NW, Suite 900
Washington, DC 20005-3314
By: 	David R. Berz, Esq.
KRAMER LEVIN NAFTALIS & FRANKEL LLP
Counsel for the Official Committee
of Unsecured Creditors
1177 Avenue of the Americas
New York, New York 10036
By: 	Thomas Moers Mayer, Esq. (argued)
Robert Schmidt, Esq.
1 	I use bench decisions to lay out in writing decisions that are too long, or too important, to dictate
in open court, but where the circumstances do not permit more leisurely drafting or more extensive
or polished discussion. Because they often start as scripts for decisions to be dictated in open
court, they typically have a more conversational tone.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 1 of 41

BUTZEL LONG, PC
Special Counsel for Official Committee
of Unsecured Creditors
380 Madison Avenue, 22nd Floor
New York, New York 10017
By: 	Barry N. Seidel, Esq. (argued)
CAPLIN & DRYSDALE, CHARTERED
Counsel for the Official Committee
of Asbestos Claimant Creditors
One Thomas Circle, NW, Suite 1100
Washington, DC 20005
By: 	Ronald E. Reinsel, Esq. (argued)
STUTZMAN, BROMBERG, ESSERMAN & PLIFKA, PC
Counsel for Dean M. Trafelet in his
Capacity as the Future Claimants’ Representative
2323 Bryan Street, Suite 2200
Dallas, Texas 75201
By: 	Sander L. Esserman, Esq. (argued)
Robert T. Brousseau, Esq.
Peter C. D’Apice, Esq.
Jo E. Hartwick, Esq.
PREET BHARARA
United States Attorney for the
Southern District of New York
Counsel for the United States of America
86 Chambers Street, 3rd Floor
New York, New York 10007
By: 	David S. Jones, Esq. (argued)
Deputy Chief, Civil Division
Natalie N. Kuehler, Esq. (argued)
Assistant United States Attorney
UNITED STATES DEPARTMENT OF JUSTICE
Counsel for the United States of America
By: 	Alan S. Tenenbaum, Esq.
National Bankruptcy Coordinator
By: 	Patrick Casey, Esq.
Senior Counsel, Environmental Enforcement Section,
Environment and Natural Resources Division
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 2 of 41

VEDDER PRICE
Counsel for Export Development Canada
1633 Broadway, 47th Floor
New York, NY 10019
By: 	Michael L. Schein, Esq. (argued)
GIBSON, DUNN & CRUTCHER LLP
Counsel for Wilmington Trust Company,
as Indenture Trustee
200 Park Avenue, 47th Floor
New York, New York 10166
By: 	Matt J. Williams, Esq. (argued)
Keith R. Martorana, Esq.
KELLEY DRYE & WARREN LLP
Counsel for Law Debenture Trust Co. of New York
as Indenture Trustee
101 Park Avenue
New York, New York 10178
By: 	David E. Retter, Esq. (argued)
MORGAN, LEWIS & BOCKIUS LLP
Counsel for JPMorgan Chase Bank, N.A., as Agent
101 Park Avenue
New York, NY 10178
By: 	Richard S. Toder, Esq. (argued)
Andrew D. Gottfried, Esq.
Annie C. Wells, Esq.
ERIC T. SCHNEIDERMAN
Attorney General of the State of New York
Counsel for the State of New York and
New York State Department of Environmental Conservation
The Capitol
Albany, New York 12224-0341
By: 	Maureen F. Leary, Esq. (argued)
Assistant Attorney General
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 3 of 41

THE WLADIS LAW FIRM, PC
Counsel for Onondaga County, New York
P.O. Box 245
Syracuse, NewYork 13214
Telephone: (315) 445-1700
By: 	Kevin C. Murphy, Esq.
DEPARTMENT OF LAW
Counsel for Onondaga County, New York
John H. Mulroy Civic Center, 19th Floor
421 Montgomery Street
Syracuse, New York 13202
By: 	Luis A. Mendez, Esq. (argued)
HARRIS BEACH PLLC
Counsel for Town of Salina
100 Wall Street
New York, New York 10005
By: 	Eric H. Lindenman, Esq. (argued)
One Park Place, 4th Floor
300 South State Street
Syracuse, New York 13202
By: 	Lee Woodard, Esq.
KAMALA HARRIS
Attorney General of California
Counsel for California Department of Toxic Substances Control
By: 	Margaret Padilla, Esq.
Olivia W. Karlin, Esq. (argued)
GREENBERG TRAURIG, LLP
Counsel for Nova Scotia Noteholders Appaloosa Management L.P.,
Aurelius Capital Management, LP, 	Elliott Management Corporation,
and Fortress Investment Group LLC
MetLife Building
200 Park Avenue
New York, New York 10166
By: 	Bruce R. Zirinsky, Esq. (argued)
Nancy A. Mitchell, Esq.
John H. Bae, Esq.
Gary D. Ticoll, Esq.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 4 of 41

AKIN GUMP STRAUSS HAUER & FELD LLP
Counsel for Green Hunt Wedlake, Inc., as
Trustee of General Motors Nova Scotia Finance Company
One Bryant Park
New York, New York 10036
By: 	Daniel H. Golden, Esq.
Philip C. Dublin, Esq. (argued)
Natalie E. Levine, Esq.
KIRKLAND & ELLIS LLP
Counsel to New United Motor Manufacturing, Inc.
601 Lexington Avenue
New York, New York 10022
By: 	Richard M. Cieri, Esq.
Ray C. Schrock, Esq.
555 California Street, 27th Floor
San Francisco, California 94104
By: 	Mark E. McKane, Esq. (argued)
ERMAN, TEICHER, MILLER,
ZUCKER & FREEDMAN, P.C.
Counsel for Centerpoint Associates, LLC
400 Galleria Officentre, Suite 444
Southfield, MichiganI 48034
By: 	Dianne S. Ruhlandt, Esq.
WINDELS, MARX, LANE
& MITTENDORF, LLP
Counsel for Allstate Insurance Company,
as successor in interest to Northbrook Excess
and Surplus Insurance Company, formerly
Northbrook Insurance Company
One Giralda Farms – Suite 380
Madison, New Jersey 07940
By: 	Stefano V. Calogero, Esq.
BARNES & THORNBURG LLP
Counsel for M-Heat Investors, LLC
171 Monroe Avenue, NW, Suite 1000
Grand Rapids, Michigan 49503
By: 	Patrick E. Mears, Esq.
John T. Gregg, Esq.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 5 of 41

HANGLEY ARONCHICK SEGAL & PUDLIN
Counsel for NCR Corporation
One Logan Square, 27th Floor
Philadelphia, Pennsylvania 19103
By: 	Matthew A. Hamermesh, Esq.
Jacqueline R. Dungee, Esq.
TRACY HOPE DAVIS
United States Trustee, Region 2
33 Whitehall Street, 21st Floor
New York, NY 10004
By: 	Brian S. Masumoto, Esq.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 6 of 41

-1-
ROBERT E. GERBER
UNITED STATES BANKRUPTCY JUDGE:
In this contested matter in the chapter 11 cases of debtor Motors Liquidation
Company, formerly known as General Motors Corp. (“Old GM”) and its affiliates
(collectively, the “Debtors”), the Debtors seek confirmation of their chapter 11 plan (the
“Plan”). While necessarily complex in aspects of its implementation, the Plan at bottom
is a relatively simple, and classic, liquidating “Pot Plan.” Under it, the securities of what
now is called General Motors LLC (“New GM”) that were brought in under Old GM’s
July 2009 sale of its assets (the “363 Sale”),2 and any further value brought in hereafter,
will simply be distributed to Old GM creditors with allowed claims. Additionally
(though importantly from a public interest perspective), substantial cash payments will be
made to implement environmental settlements with the U.S. Government and state
environmental regulators.
The Plan is very popular with Old GM’s creditors, having secured the approval of
97% of them in number, and 85% in dollar amount. 3 Confirmation was affirmatively
supported, on the record, by the Official Committee of Unsecured Creditors (the
“Creditors’ Committee”); the Official Committee of Holders of Asbestos Claims (the
“Asbestos Claims Committee”); the Asbestos Future Claims Representative (the
“Asbestos Future Claims Rep.”); the indenture trustees representing the $27 billion in
2 	To avoid making this Decision unnecessarily long, I’m assuming familiarity with the history of
this case. The background appears in my decision on the 363 Sale. See In re General Motors
Corp., 407 B.R. 463, 475-486 (Bankr. S.D.N.Y. 2009) (the “363 Decision”), appeal dismissed and
aff'd, 428 B.R. 43 (S.D.N.Y. 2010) (Buchwald, J.), and 430 B.R. 65 (S.D.N.Y. 2010) (Sweet, J.).
3 	It also received 97.8% approval, in each of number and amount, of the class of asbestos injury
claimants, the Debtors’ other major unsecured creditor class.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 7 of 41

-2-
principal amount of Old GM bonds;4 the governments of Canada and Ontario, through
their Export Development Canada, and the U.S. Government. And the number of
objections to confirmation (originally 13, thereafter reduced to 5), was very small in the
context of a case that originally had over 37,000 claims, and which, even after claims
disallowances, still has almost $50 billion in claims in amount.
Nevertheless, I still have to rule on the remaining objections5 —some contending
that further Plan modifications must be made in order to make it confirmable, and some
simply requesting changes in the Plan.6
As is increasingly common, the Plan has a feature (the “Self-Correcting
Feature”), which could be triggered at the Debtors’ option, under which the Plan would
be amended to cure any minor impediments to confirmation that might otherwise exist.
That enabled me to orally rule, at the conclusion of the Confirmation Hearing, that the
Plan would be confirmed—though I’d take under advisement objections that might cause
me to require modifications to the Plan.
4 	Wilmington Trust Company (“Wilmington Trust”), and Law Debenture Trust Company of New
York (“Law Debenture Trust”). Wilmington Trust is the indenture trustee with respect to
$23 billion of that unsecured bond debt.
5 	The States of New York and California, while objecting to aspects of the Plan, denominated their
objections as “limited” ones, and expressed their support of the Plan (and its related environmental
settlements) as a general matter, with a desire only for certain modifications.
6 	I also note, though I have no occasion to substantively address, about 50 more submissions that I
received that did not go to any matters legally cognizable on a motion for confirmation, and that
can best be described as statements of disappointment with the 363 Sale or the inevitable effect of
the chapter 11 process on creditors and stockholders—the latter of whom, unfortunately, will be
wholly wiped out. I know how they feel. But with Old GM’s resources being as limited as they
are, bankruptcy law requires that Old GM creditors be paid much less than in full, and that
stockholders, who can’t receive distributions until creditor claims have been satisfied, not receive
anything at all.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 8 of 41

-3-
Upon consideration of the objections, I determine that some of the objections
require (minor) modifications to the Plan. The remainder are lacking in merit. Thus the
Plan will be confirmed as modified.
Plan supporters may, if they wish, give me more extensive Findings of Fact and
Conclusions of Law that also cover matters that were not in controversy. My Findings of
Fact and Conclusions of Law on essential background and disputed matters, including
those where I’ve overruled remaining Plan objections, follow.
Findings of Fact7
1. Overview of the Plan
The Debtors have proposed a liquidating plan to distribute, most significantly, the
securities of New GM—stock and warrants (“New GM Securities”)—that Old GM
acquired in the 363 Sale. The Plan has 6 Classes:
 	Class 1, which, with appropriate subclasses, covers secured creditors;
 	Class 2, for section 507(a) priority payments (aside from administrative
expenses and priority tax claims);
 	Class 3, for General Unsecured Claims (the “Unsecured Class”);
 	Class 4, for Property Environmental Claims (the “Environmental
Class”);
 	Class 5, for Asbestos Personal Injury Claims (the “Asbestos Class”); and
 	Class 6, for the equity holders of Old GM.
Of these classes, only the General Unsecured Class (Class 3) and the Asbestos Class
(Class 5) were impaired and still receiving a distribution from the Estate, and thus only
7 	To shorten this Decision, I’ve limited factual citations and detail to the most significant matters.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 9 of 41

-4-
their members were entitled to vote. The equity holders of Old GM (Class 6) received no
distribution, and thus were deemed to reject. The remaining classes will be paid in full,
and thus were deemed to accept.
As noted above, each of the two voting classes voted overwhelming in favor of
the Plan.
The strong support of the Plan was made possible, in part, by a number of
settlements on which the Plan is premised. One of Old GM’s largest liabilities was its
environmental obligations to the U.S. Government and various states and sovereigns,
such as the States of New York and California, and the St. Regis Mohawk Tribe in
upstate New York. The most major environmental claims have been settled by two
separate agreements: an “Environmental Response Trust Agreement” and the “Priority
Order Site Settlements.” In addition, though Old GM’s chapter 11 case was of course not
asbestos-driven, Old GM did have material asbestos liabilities—which the Debtors and
Creditors’ Committee settled by agreements with the Asbestos Claims Committee and the
Asbestos Future Claims Rep. (fixing present and future asbestos claims at $625 million),
and with a former GM division (Delco Remy, later, Remy International, Inc.).
To manage the liquidation of this very large and complex estate, the Plan creates
four trusts:
 	the General Unsecured Creditors Trust (“GUC Trust”);
 	the Avoidance Action Trust (“Avoidance Trust”);
 	the Environmental Response Trust (“Environmental Trust”); and
 	the Asbestos Trust (“Asbestos Trust”).
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 10 of 41

-5-
The GUC Trust is responsible for managing the New GM Securities, and
distributing them to unsecured creditors with allowed claims.
The Avoidance Trust is responsible for prosecuting, collecting, and distributing
proceeds from avoidance actions brought by the liquidating estate—including, most
significantly, an avoidance action arising from the erroneous release of the security
interest on a $1.5 billion term loan, discussed below, referred to as the “Term Loan
Litigation.”
The Environmental Trust will take possession of polluted property that will
remain the responsibility of Old GM, and will be responsible for the cleanup and
management of these sites.
Finally, the Asbestos Trust will manage distributions to current and future
asbestos claimants.
2. The GUC Trust
The GUC Trust will hold and distribute the New GM Securities that were
received under the 363 Sale. Obviously, the total amount of the New GM Securities in
the GUC Trust is finite. Each creditor with an allowed claim will be entitled to its pro
rata share of the New GM Securities, along with “units” of the GUC Trust, which under
certain circumstances could permit supplemental distributions.
But while a very large number of claims were scheduled by the Debtors or
otherwise were undisputed (and thus already are allowed), much less than all of the
claims in this case (originally about 37,000 in number) are in that category. Many are in
dispute. As in every one of the dozen largest chapter 11 cases on my watch,8 the Plan
8 	See page 20 & nn. 34 and 35 below. My Chambers didn’t check the smaller cases, though I have
no reason to believe that they’d be materially different.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 11 of 41

-6-
makes distributions only on allowed claims, and distributions on claims that are disputed,
in whole or in part, must await their resolution. This is a major element in each of the
5 remaining objections that I have before me.
To address the fact that many claims aren’t now allowed, but may be allowed in
the future, the GUC Trust provides for reserves. In each case where a liquidated claim
was asserted, the Debtors simply reserved for it in the full amount the creditor claimed,
without regard to how potentially meritorious the claim might be. Previously
unliquidated claims were reserved for as well, in earlier proceedings before me.
Perhaps oversimplifying things slightly (but not in material respects), creditors
with allowed claims will get their distributions in doses, permitting appropriate measures
as the pool of disputed claims decreases.9 Pro rata distributions of those with allowed
claims will be based on their shares of the sum of allowed claims and disputed ones—
which in essence is on the assumption that all of the now disputed claims will be allowed.
If presently disputed claims turn out ultimately to be disallowed, the amount remaining in
the GUC Trust may permit more (or greater) supplemental distributions to those with
allowed claims. But this mechanism protects those whose claims are now disputed, as it
guards against premature and/or excessive distributions to those whose claims already are
allowed.
Simultaneously, it protects the thousands of creditors whose claims already are
allowed from the prejudice that might otherwise result if they have to await the end of a
claims resolution process that could take many months or even years.
9 	It’s fair to assume that some of the disputed claims will turn out to be allowed; some will be
allowed in some part; and some will be disallowed. But it’s impossible to determine, at this point,
what the dollar amount in each category will be.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 12 of 41

-7-
I expressly find as a fact that this mechanism satisfactorily, and reasonably,
addresses the needs and concerns of both holders of allowed claims and holders of
disputed claims. 10
3. Role of Wilmington Trust
Wilmington Trust (which as noted above was the indenture trustee with respect to
$23 billion of Old GM’s prepetition bond debt) will be the administrator to the GUC
Trust and the Avoidance Trust. Wilmington Trust was the Chair of the Creditors’
Committee. As a consequence of its role in acting on behalf of $23 billion in debt (both
before and after the filing of Old GM’s chapter 11 petition), and its role since June 2009
as a fiduciary for all unsecured creditors in this chapter 11 case, Wilmington Trust has
considerable familiarity with the details of this case and Old GM’s affairs. It is
reasonable for me to conclude, and I further find, that such knowledge would take time,
and be expensive, to replace.11
Wilmington Trust’s role as Indenture Trustee to GM bondholders will become
substantially limited after the Effective Date. Bond indentures will be cancelled for all
10 	The principal corpus of the GUC Trust is New GM Securities—as compared and contrasted, e.g.,
to ordinary cash. The Plan and its related documents provide for the GUC Trust Administrator to
exercise controlled discretion to manage the GUC Trust corpus, including by selling GUC assets.
See Plan Article 6.2(f) (“In furtherance of and consistent with the purposes of the GUC Trust and
the Plan, the GUC Trust Administrator shall (i) have the power and authority to hold, manage,
sell, invest, and distribute to the holders of Allowed General Unsecured Claims the GUC Trust
Assets, (ii) hold the GUC Trust Assets for the benefit of the holders of Allowed General
Unsecured Claims, (iii) have the power and authority to hold, manage, sell, invest, and distribute
the GUC Trust Assets obtained through the exercise of its power and authority . . .”). I find this to
be reasonable as well.
11 	Creditors’ Committee counsel states that “[a]ny suggestion that [Wilmington Trust] be replaced at
this late stage is misguided because, among other things, creditors will lose the benefit of a trust
administrator which has been intimately involved in these cases since their inception and which
holds an almost unparalleled amount of institutional knowledge about this case, the important
issues relevant to the unsecured creditors, and the intricate distribution mechanics outlined in the
GUC Trust Agreement and laboriously negotiated by [Wilmington Trust] and the Committee with
the Debtors, the Securities and Exchange Commission and the Depository Trust Company.”
(Creditors’ Committee Statement in Support of Plan, ¶ 12). I additionally find these observations
to be true.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 13 of 41

-8-
purposes other than ministerial duties such as the disbursing of cash, stock, and
warrants.12 Though I’m unsure whether the Plan simply codifies something Wilmington
Trust would take as a given, the Plan provides, in its Article 6.2(f), that the Trust
Administrator Wilmington Trust must “act in the best interest of all beneficiaries of the
GUC Trust and in furtherance of the purpose of the GUC Trust, and in accordance with
the GUC Trust Agreement, and not in its own best interest as a creditor.”
As noted above, the Avoidance Trust, of which Wilmington Trust will also serve
as the administrator, was established to continue the Term Loan Litigation, and to address
matters of collection and distribution of any award if the Term Loan Litigation (which
now is the subject of cross-motions for summary judgment, which are sub judice) is
successful.13 I’ve been advised that issues are also likely to exist (as to which I’ve heard
very little so far, and likewise express no view) as to whether, assuming the Term Loan
Litigation is successful, the Avoidance Trust or the U.S. Treasury will be entitled to any
proceeds. I’ve been informed (or at least have assumed) that the Creditors’ Committee
will argue that any proceeds should go to the unsecured creditors. I’ve been informed
that the U.S. Treasury may argue that any proceeds should be applied toward the
12 	See Plan Article 6.7 (“. . . on the Effective Date all the agreements and other documents
evidencing the Claims or rights of any holder of a Claim against the Debtors . . . shall be cancelled
and discharged; provided, however, that the Indentures and Fiscal and Paying Agency Agreements
shall continue in effect solely for the purposes of (i) allowing the Indenture Trustees and the Fiscal
and Paying Agents to make any distributions on account of Allowed General Unsecured Claims in
Class 3 pursuant to the Plan and perform such other necessary administrative functions with
respect thereto, (ii) permitting the Indenture Trustees and the Fiscal and Paying Agents to receive
payment from the Indenture Trustee/Fiscal and Paying Agent Reserve Cash, (iii) permitting the
Indenture Trustees and the Fiscal and Paying Agents to maintain any rights or liens they may have
for fees, costs, expenses, and indemnities under the Indentures and the Fiscal and Paying Agency
Agreements, against or recoverable from distributions made under the Plan to the Registered
Holders and/or beneficial owners of debt securities with respect to the Note Claims, the Eurobond
Claims, and the Nova Scotia Guarantee Claims, and (iv) allowing holders of Nova Scotia
Guarantee Claims to assert direct claims, if any, against GM Nova Scotia . . .” (italics in original)).
13 	Obviously, I here express no view on the likely outcome of the Term Loan Litigation, or the
pending motions.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 14 of 41

-9-
Treasury sponsored DIP Loan. Thus, the ultimate beneficiary of any successful litigation
on behalf of the Avoidance Trust is yet to be determined.
But it’s clear to me that at this point, the beneficiary of the Avoidance Trust is
plainly unsecured creditors, of which Wilmington Trust’s bondholders, a subset of the
unsecured creditor community, are an important (if not also the largest) part. There
certainly is no conflict, insofar as either the GUC Trust or the Avoidance Trust is
concerned, between Old GM bondholders and other members of the Unsecured Class.
And it’s likewise clear to me that Wilmington Trust will be focused on prosecuting the
Term Loan Litigation appropriately, and attempting to maximize value for unsecured
creditors or whoever ultimately is entitled to any proceeds.
At this point, I don’t know whether there will be any proceeds for unsecured
creditors and the U.S. Treasury to fight over, and I don’t know the extent, if any, to which
Wilmington Trust would have conflicting duties to the U.S. Treasury (as contrasted to
unsecured creditors)—especially since the U.S. Treasury, to my observation, has so far
been well represented and capable of making decisions for itself. I don’t see this as a
present or systemic conflict, if it ever will be one.
4. Other GUC Trust Provisions
The Plan also provides for several layers of oversight for the GUC Trust
Administrator. In the first instance, the GUC Trust Monitor must review and approve all
non-ministerial activities of the GUC Trust Administrator.14 The Creditors’ Committee,
14 	See, e.g., GUC Trust Agreement Article 3.5(b) (approval of GUC Trust Monitor required to issue
physical certificates as evidence for GUC units); Article 5.4(d) (approval necessary to withhold
distributions of excess assets upon discovery of previously unknown general unsecured claims);
Article 5.7(a) (approval necessary to sell expiring warrants in a privately negotiated sale); Article
6.2 (GUC Trust Monitor to review all reports prepared by the GUC Trust); Article 6.4(a)(i) (GUC
Trust Monitor to review and approve all annual budgets and updates thereto); Article 11.3
(approval necessary to resolve disputed claims over $10 million, decisions to retain or terminate
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 15 of 41

-10-
in consultation with the Debtors, appointed FTI Consulting (a well known turnaround
firm, whose retention, as the Creditors’ Committee’s financial advisor, I approved early
in this case) as the GUC Trust Monitor.15
The GUC Trust Agreement further provides for me to review and approve actions
that may be thought of as outside of the ordinary course of business; for the GUC Trust to
file quarterly reports in this Court and on a website (and, after a forthcoming revision to
the GUC Trust Agreement, with the SEC), and for the GUC Trust’s financial statements
to be audited. The beneficiaries of the GUC Trust also have the authority to remove the
GUC Trust Administrator and/or the GUC Trust Monitor upon a showing of good cause.
The Plan allows the GUC Trust Administrator in consultation with the GUC Trust
Monitor to settle claims without Court approval. Some claims can be settled by the GUC
Trust Administrator without the approval of the GUC Trust Monitor. But the Plan
provides the GUC Trust Administrator must obtain the approval of the GUC Trust
Monitor with respect to settlements of Disputed General Unsecured Claims above a
certain threshold.
The GUC Trust Agreement also allows the GUC Trust Administrator to request
that the Bankruptcy Court estimate, under 502(c) of the Code, any disputed claim for
purposes of distribution or for creating a cap on a claim.
employment of trust professionals, incur costs over budget, and amend the GUC Trust
Agreement).
15 	Other professionals who have worked extensively in connection with Old GM’s chapter 11 case
will likewise continue to do so, taking on new roles in the administration of the trusts created by
the Plan. AP Services (another well-known turnaround advisory firm, which managed Old GM
during this chapter 11 case) will be retained by the GUC Trust to manage “day to day operations.”
Weil Gotshal, which has served as the Debtors’ counsel throughout this case, may serve as counsel
to the GUC Trust and Wilmington Trust after confirmation.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 16 of 41

-11-
5. Claims by Nova Scotia Noteholders and Green Hunt Wedlake 16
Old GM has Canadian subsidiaries, including, at the least, GM Canada and GM
Nova Scotia Finance Company (“GM Nova Scotia”), the latter of which issued about
US $1.05 billion in unsecured notes (the “Nova Scotia Notes”), the proceeds of which
went to GM Canada, at least in the first instance. Old GM guarantied the Nova Scotia
Notes.
At some point in time, GM Nova Scotia became insolvent. In October 2009, it
was adjudged bankrupt, and Green Hunt Wedlake was appointed as the Trustee of GM
Nova Scotia by the Nova Scotia courts under Nova Scotia law.
At one or more points in time, Appaloosa Management, Aurelius Capital
Management, Elliott Management, and Fortress Investment Group (the “Nova Scotia
Noteholders”), and other hedge funds,17 invested in the Nova Scotia Notes. The Nova
Scotia Noteholders and Green Hunt Wedlake contend that Old GM is liable to the Nova
Scotia Noteholders under its guaranty, and also, that under Nova Scotia law, 18 Old GM,
as a direct corporate parent of GM Nova Scotia, is separately statutorily liable to Green
16 	This discussion addresses only the most basic aspects of a complex series of facts, and related
dispute, and is by way of background only. It undoubtedly leaves out facts upon which one side
or the other will later rely when I rule on the merits. It’s not intended to consist of Findings of
Fact with respect to the underlying transaction; its legality; any rights of Old GM creditors, the
Nova Scotia Noteholders or Green Hunt Wedlake with respect to it; or the merits of the Creditors’
Committee’s objection to the claims of the Nova Scotia Noteholders and Green Hunt Wedlake,
discussed below. It’s expressly without prejudice to whatever either side will show me in the
ensuing litigation.
17 	The others included Anchorage Capital Master Offshore Ltd., Canyon-GRF Master Fund, Canyon
Value Realization Fund Limited, Knighthead Master Fund, LMA SPC for and on behalf of MAP
84, Lyxor/Canyon Realization Fund, Onex Debt Opportunity Fund, Redwood Master Fund, and
The Canyon Value Realization Master Fund. They joined in the Nova Scotia Noteholders’
objection, but failed to comply with Fed.R.Bankr.P. 2019, and then with an order I had entered
after their failure to comply was noted. They’ve since requested extra time to bring themselves
into compliance, which I’ve granted. Assuming that they comply within the requested additional
time, I’ll consider that their joinder was valid and should be considered.
18 	They cite Section 135 of the Companies Act (Nova Scotia). I now make no finding as to whether
their assertion is correct.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 17 of 41

-12-
Hunt Wedlake (for the ultimate benefit of the Nova Scotia Noteholders) for the liabilities
of GM Nova Scotia when GM Nova Scotia is wound up.
On the eve of Old GM’s chapter 11 filing, the Nova Scotia Noteholders secured a
$369 million “Consent Fee” as part of a “Lock-Up Agreement” in which they say they
provided “substantial benefits”19 in exchange, the value and bona fides of which are
disputed by the Creditors’ Committee. The “Consent Fee” represented about 37% of the
total US $1.072 billion principal amount of the Nova Scotia Notes. Funds sufficient to
cover the “Consent Fee,” which GM Canada then used to fund it,20 are said to have been
loaned by Old GM to GM Canada on May 29, 2009, two days before the filing. The
US $369 million thereafter found its way to the Nova Scotia Noteholders. The Nova
Scotia Noteholders say that “[t]his loan was made before the agreement between the GM
Parties and the Nova Scotia Noteholders, and was not a component of the Lock-Up
Agreement.”21
The Creditors’ Committee in this case has objected to the Nova Scotia
Noteholders’ claim—arguing, among other things, that the “Consent Fee” can’t be
ignored when computing the Nova Scotia Noteholders’ entitlement, and that the
circumstances under which the Nova Scotia Noteholders extracted the “Consent Fee” are
such that their claims should be equitably subordinated or disallowed.
Though the principal amount of the Nova Scotia Notes is US $1.072 billion, and
I’ve been led to believe (though I do not now find) that they constitute the great bulk of
GM Nova Scotia’s debt, the collective claims of the Nova Scotia Noteholders and Green
19 	Nova Scotia Noteholders Obj. at 10.
20 	Id. n.3.
21 	Id.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 18 of 41

-13-
Hunt Wedlake (the full amount of which the Debtors have fully reserved for) total
US $2.6 billion.22 And that US $2.6 billion has not been reduced by the $369 million
“Consent Fee” that the Nova Scotia Noteholders received. The Creditors’ Committee
also contends that the claim of Green Hunt Wedlake, the trustee appointed under Nova
Scotia law to recover for the capital deficiencies of GM Nova Scotia, is inappropriately
duplicative of the Nova Scotia Noteholders’ claims.
The Nova Scotia Noteholders and Green Hunt Wedlake dispute the Creditors’
Committee’s contentions. The former argue, among other things, that the transaction was
entirely proper, and that they acted neither unlawfully or inequitably. They also contend
that the Creditors’ Committee’s concerns are, if anything, in the nature of an avoidance
action, which, they contend, the Creditors’ Committee cannot bring. Green Hunt
Wedlake additionally argues, among other things, that Nova Scotia law permits the
allegedly duplicative recovery. Discovery is ongoing, and I haven’t yet ruled on the
merits of the controversy.
6. Releases and Exculpations
(a) By Debtors
In Article 12.5 of the Plan,23 the Estate releases present and former directors and
officers of the Debtors; all post-Commencement Date advisors and other professionals of
22 	The Nova Scotia Noteholders’ claim is for US $1.072 billion, and Green Hunt Wedlake’s claim is
for approximately US $1.608 billion.
23 	Plan Article 12.5 (“As of the Effective Date, the Debtors release (i) all present and former
directors and officers of the Debtors who were directors and/or officers, respectively, on or after
the Commencement Date, and any other Persons who serve or served as members of management
of the Debtors on or after the Commencement Date, (ii) all post-Commencement Date advisors,
consultants, agents, counsel, or other professionals of or to the Debtors, the DIP Lenders, the
Creditors’ Committee, the Asbestos Claimants’ Committee, the Future Claimants’ Representative,
the Indenture Trustees, and the Fiscal and Paying Agents, and (iii) all members (current and
former) of the Creditors’ Committee and of the Asbestos Claimants’ Committee, in their capacity
as members of such Committees, the Future Claimants’ Representative, and the Indenture Trustees
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 19 of 41

-14-
the Debtors; the DIP Lenders; each of the Creditors Committee, the Asbestos Committee,
and the Asbestos Future Asbestos Rep. (together, the “Chapter 11 Fiduciaries”); the
Indenture Trustees; the Fiscal and Paying Agents; all past and present members of the
Chapter 11 Fiduciaries; and the officers, directors, and employees of the Indenture
Trustees and the Fiscal and Paying Agents from specified types of claims.
The claims released by the Estate in Article 12.5 are those “in any way relating to
the Debtors, the Chapter 11 Cases, the Plan, negotiations regarding or concerning the
Plan, and the ownership, management, and operation of the Debtors.”
Importantly, however, the claims released expressly carve out
actions found by Final Order to be willful
misconduct (including, but not limited to, conduct
that results in a personal profit at the expense of the
Debtors’ estates), gross negligence, fraud,
malpractice, criminal conduct, unauthorized use of
confidential information that causes damages,
breach of fiduciary duty (to the extent applicable),
and ultra vires acts…
and the Fiscal and Paying Agents and their respective officers, directors, and employees from any
and all Causes of Action held by, assertable on behalf of, or derivative from the Debtors, in any
way relating to the Debtors, the Chapter 11 Cases, the Plan, negotiations regarding or concerning
the Plan, and the ownership, management, and operation of the Debtors, except for actions found
by Final Order to be willful misconduct (including, but not limited to, conduct that results in a
personal profit at the expense of the Debtors’ estates), gross negligence, fraud, malpractice,
criminal conduct, unauthorized use of confidential information that causes damages, breach of
fiduciary duty (to the extent applicable), and ultra vires acts; provided, however, that the foregoing
(a) shall not operate as a waiver of or release from any Causes of Action arising out of any express
contractual obligation owing by any former director, officer, or employee of the Debtors or any
reimbursement obligation of any former director, officer, or employee with respect to a loan or
advance made by the Debtors to such former director, officer, or employee, and (b) shall not limit
the liability of any counsel to their respective clients contrary to Rule 1.8(h)(1) of the New York
Rules of Professional Conduct.” (italics in original)).
Article12.5 (as well as Article 12.6) sets forth these very important provisions in a single block of
single-spaced text, running half a page or more in length, without any formatting to make it
readable. I wish the lawyers of the world would learn not to do this.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 20 of 41

-15-
Article 12.5 also excepts from its waivers of claims and releases any causes of action
arising out of any Debtor officer, director, or employee’s express contractual obligations
with respect to a loan or advance, and certain professional duties of counsel to its clients.
(b) By Third Parties—Creditors and Equity Security Holders
In a subsequent Article 12.6,24 the Plan provides exculpation to various protected
persons and entities. Importantly, Article 12.6 doesn’t apply to litigation rights owned by
the Estate (which are covered under Article 12.5) but rather applies to litigation rights of
creditors and stockholders or any other equity security holders. And in fact, it protects
the Debtors themselves. With respect to the types of claims specified below, Article 12.6
provides that the Debtors, the Trust Administrators, the DIP Lenders, the Chapter 11
Fiduciaries, the Indenture Trustees, and the Fiscal and Paying Agents (and all related,
24 	Plan Article 12.6 (“Neither the Debtors, the GUC Trust Administrator, the Asbestos Trust
Administrator, the Environmental Response Trust Administrative Trustee, the Avoidance Action
Trust Administrator, the DIP Lenders, the Creditors’ Committee, the Asbestos Claimants’
Committee, the Future Claimants’ Representative, the Indenture Trustees, and the Fiscal and
Paying Agents, nor any of their respective members (current and former), officers, directors,
employees, counsel, advisors, professionals, or agents, shall have or incur any liability to any
holder of a Claim or Equity Interest for any act or omission in connection with, related to, or
arising out of the Chapter 11 Cases; negotiations regarding or concerning the Plan, the GUC Trust
Agreement, the Environmental Response Trust Agreement, the Asbestos Trust Agreement, the
Avoidance Action Trust Agreement, the Environmental Response Trust Consent Decree and
Settlement Agreement, and the Priority Order Sites Consent Decrees and Settlement Agreements;
the pursuit of confirmation of the Plan; the consummation of the Plan; or the administration of the
Plan or the property to be distributed under the Plan, except for actions found by Final Order to be
willful misconduct, gross negligence, fraud, malpractice, criminal conduct, unauthorized use of
confidential information that causes damages, breach of fiduciary duty (to the extent applicable),
and ultra vires acts, and, in all respects, the Debtors, the GUC Trust Administrator, the Asbestos
Trust Administrator, the Environmental Response Trust Administrative Trustee, the Avoidance
Action Trust Administrator, the Creditors’ Committee, the Asbestos Claimants’ Committee, the
Future Claimants’ Representative, the Indenture Trustees, the Fiscal and Paying Agents, and each
of their respective members (current or former), officers, directors, employees, counsel, advisors,
professionals, and agents shall be entitled to rely upon the advice of counsel with respect to their
duties and responsibilities under the Plan; provided, however, that the foregoing shall not limit the
liability of any counsel to their respective clients contrary to Rule 1.8(h)(1) of the New York Rules
of Professional Conduct. In the event a holder of a Claim fails to satisfy a Medical Lien, the
holder of such Medical Lien shall be barred and prohibited from seeking recourse directly against
the Debtors, the GUC Trust, and any of their respective officers, directors, representatives,
employees, counsel, and advisors.” (italics in original)).
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 21 of 41

-16-
past and present, directors, employees, counsel, advisors, professionals, or agents of any
of them) will not incur any liability to any creditor or equity security holder.
The claims covered are those “for any act or omission in connection with, related
to, or arising out of”:
 	the Chapter 11 Cases;
 	negotiations regarding or concerning the Plan, the GUC Trust Agreement,
the Environmental Response Trust Agreement, the Asbestos Trust
Agreement, the Avoidance Action Trust Agreement, the Environmental
Response Trust Consent Decree and Settlement Agreement, and the
Priority Order Sites Consent Decrees and Settlement Agreements;
 	the pursuit of confirmation of the Plan;
 	the consummation of the Plan; or
 	the administration of the Plan or the property to be distributed under the
Plan…
Article 12.6 also expressly provides that the protected parties may rely on the
advice of counsel with respect to their duties and responsibilities under the Plan.
Importantly, however, as in Article 12.5, the exculpation does not protect actions
that are particularly egregious:
actions found by Final Order to be willful
misconduct, gross negligence, fraud, malpractice,
criminal conduct, unauthorized use of confidential
information that causes damages, breach of
fiduciary duty (to the extent applicable), and ultra
vires acts…
Article 12.6 also carves out of from its exculpation provisions certain duties of counsel to
its clients.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 22 of 41

-17-
Discussion
The objections overlap in many respects, and thus I’ll group and address them by
concept, rather than by objector. I’ll turn first to objections that are overruled, and then
to objections that I believe require Plan modifications.
1. Lack of Good Faith
As noted above,25 the Nova Scotia Noteholders—holders of notes of nondebtor
General Motors Nova Scotia, which were guarantied by Old GM—secured a $369
million “Consent Fee” as part of a “Lock-Up Agreement” on the eve of Old GM’s
chapter 11 filing. The “Consent Fee” represented about 37% of the total $1.072 billion
principal amount of the Nova Scotia Notes. The Creditors’ Committee in this case has
objected to the Nova Scotia Noteholders’ $1.07 billion claim—arguing, among other
things, that the $369 million “Consent Fee” can’t be ignored when computing the Nova
Scotia Noteholders’ entitlement, and that the circumstances under which the Nova Scotia
Noteholders extracted the “Consent Fee” are such that their claims should be equitably
subordinated or disallowed. The Creditors’ Committee also contends that the separate
$1.6 billion claim of Green Hunt Wedlake, the trustee appointed under Nova Scotia law
to recover for the capital deficiencies of GM Nova Scotia, is inappropriately duplicative
of the Nova Scotia Holders’ claims. The Nova Scotia Noteholders and Green Hunt
Wedlake dispute the Creditors’ Committee’s contentions. Discovery is ongoing, and I
haven’t yet ruled on the merits of the controversy.
25 	See pages 11 through 13 above.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 23 of 41

-18-
Green Hunt Wedlake argues26 that the Plan was not proposed in good faith (and
thus is unconfirmable for failure to meet the requirements of section 1129(a)(3) of the
Code),27 because the Plan unfairly deals with its claims. The Nova Scotia Noteholders,
while not invoking or otherwise mentioning section 1129(a)(3), simply say that the Plan
is “grossly unfair.”28 Each argues that the Plan evidences a failure to act with fairness
towards holders of disputed claims, or at least disputed claims held by them, because the
Plan does not provide for partial distributions to holders of disputed claims. They argue
that the Plan should provide for either payment of the undisputed portion of their claims,
or for the outstanding amount of the Nova Scotia Notes, less the “Consent Fee.”
But I disagree with their contentions that the Plan must provide for any payment
to them at this time, and I especially disagree with the contention that the Plan wasn’t put
forward in good faith.
The objections are both factually and legally deficient. As factual matters, the
Nova Scotia Noteholders and Green Hunt Wedlake give insufficient attention to the fact
that the Plan provision denying immediate payment on account of disputed claims applies
not just to them, but to every other claimant with a disputed claim in the Old GM chapter
11 case. This wasn’t a bill of attainder.
26 	See Green Hunt Wedlake Obj. at 2-3.
27 	Section 1129 of the Code provides, in relevant part:
(a) The court shall confirm a plan only if all of the following
requirements are met:
…
(3) The plan has been proposed in good faith and
not by any means forbidden by law.…
28 	Nova Scotia Noteholders Obj. at 13; accord id. at 6 and elsewhere in Nova Scotia Noteholders
Obj.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 24 of 41

-19-
They also give insufficient attention to the fact that the Creditors’ Committee,
with an objection that at the very least was colorable,29 asked me to disallow, and
subordinate, the Nova Scotia Noteholders’ and Green Hunt Wedlake’s claims in their
entirety. Delay in payment was a natural consequence of that objection. There was no
undisputed portion of either claim that could or should otherwise be entitled to a
distribution under the Plan.30
Similarly, as a legal matter, the Nova Scotia Noteholders and Green Hunt
Wedlake must recognize that as a consequence of the Creditors’ Committee’s objection,
29 	The Nova Scotia Noteholders told me at a previous conference on the Creditors’ Committee’s
objection, and now say once again (Nova Scotia Noteholders Obj. at 13), that they want to contend
that that the Creditors’ Committee’s objection fails to satisfy the pleading requirements of Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), and
is “implausible,” within the meaning of Iqbal. The contention surprised me then, and surprises me
now. The Nova Scotia Noteholders have a reservation of rights as to any issues that they may
hereafter raise at trial, or on motion. But if the Nova Scotia Noteholders press the point, I’ll want
both sides to address whether I’m mistaken in my understanding that each of Twombly and Iqbal
was a decision dealing with the requirements for a complaint under Fed.R.Civ.P. 8, as tested under
Civil Rule 12(b)(6), see 550 U.S. at 554-556 (Twombly), and 129 S.Ct. at 1949-1950 (Iqbal). I’ll
want the two sides also to address how Twombly and Iqbal apply to objections to claims, when
Fed.R.Bankr.P. 9014, which applies to contested matters (of which objections to claims are one
type), does not make Bankruptcy Rules 7008 and 7012 applicable in contested matters (thereby
incorporating Civil Rules 8 and 12) unless the court orders otherwise.
Of course, objections to claims are subject to Bankruptcy Rule 9011. And it annoys me greatly, to
use the most restrained words I can, when parties in interest assert frivolous objections to claims.
But based on the briefing and oral argument that I’ve had so far, I necessarily must regard the
Creditors’ Committee’s objection as raising very serious issues, that are deserving, to say the least,
of factual and legal scrutiny. Assuming, without deciding, that to qualify as an objection for
purposes of section 502(a) of the Code, the objection must at least be colorable, I rule that the
Creditors’ Committee’s objection here easily passed that test.
30 	See Creditors’ Committee Obj. to Nova Scotia Noteholders’ Claim (ECF #6248). In their
objection (see Nova Scotia Noteholders Obj. at 17 & n.6), the Nova Scotia Noteholders suggest
that they are entitled to payment on account of most of their claims, because the Creditors’
Committee “is not seeking to recover the Consent Fee, but simply to reduce the Claims by the
amount of the Consent Fee” (id. at n.6 (emphasis in original))—as if those were the only two
matters, or alternatives, on the table. They materially mischaracterize the Creditors’ Committee’s
position, and, as the Creditors’ Committee fairly points out (Creditors’ Committee Statement at 5
n.6), take words out of context. It was and still is plain to me that when the Creditors’
Committee’s special counsel answered a question I asked in the December 2010 conference with
respect to this controversy, the Creditors’ Committee wasn’t withdrawing its requests for
disallowance and equitable subordination in connection with its objection, and was merely
confirming that it wasn’t asking for a clawback of the $369 million. I’m surprised, and
disappointed, that the Nova Scotia Noteholders would be making arguments in this fashion.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 25 of 41

-20-
each of them lost the benefit of section 502(a) of the Code, which provides in substance
that a proof of claim is allowed if, but only if, a party in interest does not object.31
Similarly, Green Hunt Wedlake has given me no basis in fact, or in law, for its
contention that this Plan was put forward in anything but good faith. Plans can, and
sometimes do, trump the normal statutory scheme and provide for at least some
distributions on claims that have been objected to—most commonly, where they have
been objected to only in part. Each of the Nova Scotia Noteholders and Green Hunt
Wedlake was able to cite a few confirmation orders (though the same ones) wherein that
mechanism was part of the confirmed plan—though in each case under circumstances
that the Creditors’ Committee notes are distinguishable, and in each case without a ruling
by the court as to whether that was required.32 But as at least the Nova Scotia
Noteholders (all of whom are distressed debt investors and regular participants in cases in
this Court) know, and both objectors’ counsel know, provisions of the type they criticize,
and which Green Hunt Wedlake asserts to be “bad faith,” have been a regular feature of
reorganization plans approved in this Court.
I haven’t gone through the dockets of every case in this district, and thus can’t
empirically confirm my suspicion, or make a factual finding, that the disputed claim
provisions in this Plan appear in the overwhelming majority of chapter 11 plans in this
31 	Section 502(a) of the Code provides, in relevant part:
A claim …, proof of which is filed under section 501 of this
title, is deemed allowed, unless a party in interest … objects.
32 	The Nova Scotia Noteholders and Green Hunt Wedlake initially failed to comply with the
requirements of my Case Management Order, ¶32, which provides that I won’t take as authority
citations to orders (as contrasted to opinions) unless additional information is provided describing
the context in which the order was entered and the provision for which the order was cited
appeared—and in particular, the extent to which the propriety of the provision was opposed by any
party, and the court actually focused on it or ruled on it. The Nova Scotia Noteholders and Green
Hunt Wedlake thereafter cured the deficiency, but when they did so, it appeared that in none of the
cases cited did the court actually rule on the matter.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 26 of 41

-21-
district and elsewhere. But I can say, and find (after a simple docket review),33 that
substantively identical provisions have appeared in at least a dozen earlier confirmed
plans in cases on my watch over the last 10 years—in every one of my largest chapter 11
wherein a plan was confirmed at all34 —including one filed by the Nova Scotia
Noteholders’ own counsel.35 They are by no means atypical, and are hardly evidence of
bad faith.
33 	See Fed. R. Evid. 201(b)(1) and (2), 201(c).
34 	Only the earliest two will be quoted; it would unnecessarily lengthen this Decision to quote the
plan language in all of them. See plans in In re Indesco Int’l, No. 00-15452 (REG) (“Indesco”)
(ECF #381) Article VIII(D) (“except as otherwise agreed by the Reorganized Debtor and/or the
Committee in their sole discretion, no partial payments and no partial distributions will be made
with respect to a Disputed Claim until the resolution of such dispute by settlement or Final
Order”); In re PSINet, Inc., No. 01-13213 (REG) (ECF #1123) § 8.4(d)(i) (“No payments or
distributions will be made with respect to all or any portion of a Disputed Claim unless and until
all objections to such Disputed Claim have been settled or withdrawn or have been determined by
a Final Order, and the disputed Claim has become an Allowed Claim.”); In re Global Crossing
Ltd., 02-40188 (REG) (ECF #2586) § 7.3; In re Century/ML Cable Venture, No. 02-14838 (REG)
(ECF #268) §§ 6.4 & 4.6; In re Adelphia Business Solutions, Inc., No. 02-11389 (REG) (ECF
#1607) § 6.1; In re Adelphia Communications Corp., 02-41729 (REG) (ECF #12770) § 11.5; In re
Our Lady of Mercy Medical Center, No. 07-10609 (REG) (ECF #1027) § 5.03; In re
BearingPoint, Inc., No. 09-10691 (REG) (ECF #1326) § 7.2; In re Lyondell Chemical Co., 09-
10023 (REG) (“Lyondell”) (ECF #4418) § 8.3; In re T H Agriculture & Nutrition, L.LC., No. 08-
14692 (REG) (“THAN”) (ECF #532) § 8.3; In re Chemtura Corp., No. 09-11233 (REG) (ECF
#4387) § 7.6(b).
The plan in still another case, that of DBSD North America, provided similarly. See In re DBSD
North America, Inc. No. 09-13061 (ECF #506) Article IV(D). The confirmation order with
respect to that plan was affirmed by the district court, but reversed in part on other grounds by the
Second Circuit. See In re DBSD North America, 419 B.R. 179 (Bankr. S.D.N.Y. 2009)
(“DBSD”), aff’d 2010 WL 1223109 (S.D.N.Y. 2010), aff’d in part and reversed in part, in each
respect on other grounds, 627 F.3d 496 (2d Cir. 2010) (Order) and 2011 WL 350480, --- F.3d ---
(2d Cir. 2011) (Opinion).
So as not to violate the rule with which the Nova Scotia Noteholders and Green Hunt Wedlake
initially failed to comply, I note that in none of those cases was the propriety of the provision
litigated, as best I recall, nor was the propriety of the provision ever challenged, on bad faith
grounds or otherwise. In one case, Indesco, as the quoted language reflects, the debtors and
creditors’ committee were given the power to waive the provision, and in another case, Lyondell,
the provision applied to unsecured claims, but did not apply to three other classes of funded
secured debt, where the latter’s claims had been the subject of a settlement.
35 	See THAN plan § 8.3, n.34 above. See also the confirmation order in THAN, which was submitted
to me for approval and signature by the Nova Scotia Noteholders’ counsel, and, after its entry,
picked up and electronically published by Westlaw. In re T H Agriculture and Nutrition, L.L.C.,
2009 WL 7193573, *17 (Bankr. S.D.N.Y. 2009) (“Notwithstanding any other provision of the
Plan, if any portion of a Claim (other than an Asbestos PI Claim) is a Disputed Claim, no payment
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 27 of 41

-22-
In a recent decision in Adelphia,36 I ruled on the propriety of a plan provision
under which the estate paid the professional fees of a large number of ad hoc committees
of distressed debt investor unsecured creditors, without a showing on their part of
“substantial contribution.” I found such a provision lawful when it was included in a
reorganization plan—noting that section 1123(b)(6) of the Code provides that a
reorganization plan may “include any other appropriate provision not inconsistent with
the applicable provisions of this title.”
I commented in Adelphia that a bankruptcy court should “be wary of declaring a
plan provision not ‘appropriate,’ and hence forbidden, in the absence of a violation of
statutory or caselaw, a provision plainly contrary to public policy, or, perhaps, unusual
circumstances or good reason that the Court cannot find here.” And I went on to say that:
The various interests of maintaining the necessary
flexibility for plan proponents and other parties in
interest, maintaining predictability in the
bankruptcy courts of this district and elsewhere, and
avoiding judicial legislation all suggest a
construction of section 1123(b)(6) under which
judges act with restraint in declaring plan provisions
not to be appropriate based on anything short of
bankruptcy caselaw, nonbankruptcy statutory or
case law, or clear public policy concerns.37
The provision challenged here is hardly contrary to the Code. It is fully consistent
with the Code, and, indeed, may fairly be said to implement it. And as I’ve noted, it is a
provision commonly, if not also typically, included in chapter 11 plans in this district and
elsewhere—including the plan in THAN that the objecting Nova Scotia Noteholders’
or Distribution provided for under the Plan shall be made on account of such Claim, unless and
until such Claim becomes an Allowed Claim.”).
36 	In re Adelphia Communications Corp., 441 B.R. 6 (Bankr. S.D.N.Y. 2010) (“Adelphia Non-
Fiduciary Fees Decision”).
37 	Id. at 19.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 28 of 41

-23-
counsel filed.38 Particularly after Adelphia—wherein I emphasized the great flexibility
that plan proponents have in crafting reorganization plans, and approved a provision
whose propriety was much more debatable—there is no basis for a suggestion that
inclusion of this commonplace provision is indicative of “bad faith.”
2. Unequal Treatment Within Unsecured Class
A few creditors or creditor groups (the Nova Scotia Noteholders, Green Hunt
Wedlake, the States of New York and California, and the Town of Salina, each of which
are in Class 3, the Unsecured Class) make an argument that’s a variant of the one I just
addressed. All assert unfair discrimination between the members of the Unsecured Class
whose claims already are allowed, and those whose claims are not, and ask me to order
that the Plan be changed to provide for payment on disputed claims. Two contend that if
the Plan isn’t so modified, the Plan is unconfirmable. I disagree that the argued
deficiency makes the Plan unconfirmable, and (whether or not the argued deficiency rises
to the level of a confirmation objection), decline to order the requested changes in the
Plan.
To the extent that the objectors rely on applicable Code provisions for their
objections, they argue that the Plan violates sections 1129(a)(1) and 1123(a)(4) of the
Code.39 They base those objections on the fact that, as noted above, the Plan provides
38 	See n.35 above.
39 	Section 1129(a)(1) of the Code provides that the court shall confirm a plan only if, among other
things, “[t]he plan complies with the applicable provisions of this title”—i.e., the Bankruptcy
Code. Section 1123 of the Code provides, in relevant part:
(a) Notwithstanding any otherwise applicable nonbankruptcy
law, a plan shall—
…
(4) provide the same treatment for each claim or
interest of a particular class, unless the holder of a
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 29 of 41

-24-
that until disputed claims are allowed, distributions on account of those claims won’t be
made. 40 I’ve addressed this above, and just as such a mechanism isn’t indicative of bad
faith, it doesn’t result in unequal treatment of creditors in the same class.
Section 1123(a)(4) requires a plan to provide the same treatment for each claim of
a particular class. That means, as practical matter, that all allowed claims within a
particular class should get the same treatment, and that if claims are disputed and not yet
allowed (but have the potential to be allowed), reasonable measures must be taken to
ensure that the required same treatment is received if and when they’re allowed. In fact,
Weiss-Wolf,41 one of the cases upon which the Nova Scotia Noteholders rely, expressly
states, after first noting that “[t]he plan must treat claims in the same class alike, just as
like claims must be classified together,”42 that “[a] debtor need not, of course, pay
disputed claims until the claims are fixed and the dispute resolved.”43
Of course it’s true, as the Nova Scotia Noteholders observe,44 that courts in this
and other jurisdictions have required debtors to establish reserves with assets sufficient to
pay disputed claims in full to allow creditors full pro rata recovery on their claims.45 But
particular claim or interest agrees to a less favorable
treatment of such particular claim or interest.…
40 	California additionally expressed a concern that an objection to one of its several separate claims
(relating to separate polluted properties) would result in the inability to receive distributions on
any of them. The Debtors clarified that this wasn’t their intent, and that the Plan won’t function in
that manner. Thus this concern, which would otherwise be a matter of concern to me, has been
satisfactorily resolved.
41 	In re Weiss-Wolf, Inc., 59 B.R. 653 (Bankr. S.D.N.Y. 1986) (Beatty, J.) (“Weiss-Wolf”).
42 	Id. at 655.
43 	Id. (emphasis added).
44 	See Nova Scotia Noteholders Obj. at 20.
45 	See, e.g., Weiss-Wolf, 59 B.R. at 655 (after noting that a debtor needn’t pay disputed claims until
the claims are fixed and the dispute resolved, continuing “[h]owever, a debtor must make
provision for payment of disputed claims so that if and when allowed the claims have reasonable
assurance that they will receive identical treatment.”).
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 30 of 41

-25-
that begs the question; the Plan supporters here did exactly that. 46 They reserved for
whatever the claimants asked for. But the duty to reserve for disputed claims that may
ultimately be allowed does not equate to the duty to immediately pay them.
The Plan’s GUC Trust Agreement provides, in substance, that in the absence of
agreement on the amount to reserve (or a determination by the Court), the GUC Trust
will simply reserve the full liquidated amount the claimant asked for. Here, for example,
though the Nova Scotia Noteholders’ and Green Hunt Wedlake’s claims are objected to,
and they will not get distributions unless and until their claims are allowed, reserves have
been set up to cover the full $2.6 billion aggregate amount of the Nova Scotia
Noteholders and Green Hunt Wedlake claims. Thus the Plan supporters have already
given those claimants all that the latter reasonably could demand.
There also is no legal impediment to funding the reserves with New GM
Securities. That is the only currency that Old GM received from New GM at the time of
the sale, and the only currency that Old GM has to provide to its creditors. By its nature,
the value of Old GM stock can go down, or go up. Equal treatment does not require
establishing additional mechanisms for holders of disputed claims to track the
movements of the stock market. Plan proponents must take reasonable steps to fund
reserves for disputed claims. 47 Everybody gets a pro rata share of the New GM
Securities, if and when claims are allowed. That’s equal treatment.
46 	I read the Town of Salina’s objection (which was filed well before the Confirmation Hearing, and
also before the earlier hearing to finalize fund reserves) to be asking that sufficient reserves be
established. (See Salina Obj. at 3). At the earlier hearing on fund reserves, the amounts necessary
to reserve for unliquidated claims were fixed, and as a consequence, I believe that this otherwise
legitimate concern on Salina’s part was satisfactorily resolved. I didn’t understand the Town of
Salina to be demanding that its disputed claims be paid immediately.
47 	See Weiss-Wolf, 59 B.R. at 655 (“a debtor must make provision for payment of disputed claims so
that if and when allowed the claims have reasonable assurance that they will receive identical
treatment.” (emphasis added)).
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 31 of 41

-26-
There can be no doubt that the Debtors and Creditors’ Committee have been
trying to do the right thing. In fact, Creditors’ Committee’s counsel offered to put
additional language into the Plan to memorialize that intent; It would say:
For the avoidance of doubt, it is intended that the
distributions to be made to holders of resolved,
allowed, general unsecured claims, in accordance
with this Section 5.3, shall provide such holders as
nearly as possible with the exact same amount of
distributions of each asset type, as if such holders
had been holders of initial allowed general
unsecured claims.
He added:
I mean the English is not Shakespeare, but
hopefully, it is clear enough that the purpose of this
agreement is to make sure that if you’re allowed
early or you’re allowed late, you’re getting the same
distributions. That’s the intent of the agreement.48
Thus there is no legally cognizable unequal treatment as between members of the
Unsecured Class. Each will get its full entitlement if its claim is allowed.
3. Segregated Reserves and Other Requested Special Treatment
The Nova Scotia Noteholders and Green Hunt Wedlake further contend that the
Plan must establish segregated reserves, for their benefit alone, from which their claims
will be satisfied if their claims are allowed.49 If the Plan doesn’t do so (and if the Plan
continues to provide, as it does now, that the reserves for their benefit will be part of the
Such reasonable steps do not require complex and potentially expensive means for hedging against
what could happen in the future, such as by setting up mechanisms, as the one New York would
like (New York Obj. at 12), that the Plan be rewritten to provide the same “value,” rather than the
same distribution, to each holder of a disputed claim that’s ultimately allowed. While consensual
market movement true-ups are of course permissible (and I approved a plan with such in
Adelphia), it is quite a different thing to say that they are required. Reasonable steps likewise do
not require, as New York also argues, id., making all of the holders of already allowed claims take
lesser distributions so as to accommodate those whose claims are now in dispute.
48 	Confirmation Hrg. Tr. at 73.
49 	See Nova Scotia Noteholders Obj. at 18-21; Green Hunt Wedlake Obj. at 5-6.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 32 of 41

-27-
much larger reserve applying to all disputed claims), they argue that the Plan will be
unconfirmable. Once more I cannot agree.
While, as noted above, caselaw requires that reserves be established for holders of
disputed claims, it does not impose any additional requirement that such reserves be
segregated for each holder of a disputed claim. 50 The Nova Scotia Noteholders cite cases
establishing the need for reserves, but none of those cases further set forth a requirement
that the reserves be segregated for each claimant. In a large chapter 11 case, like this one,
with thousands of disputed claims (or even a medium size case, with hundreds), the
burden of such a requirement, if there ever were one, would be obvious.
The Nova Scotia Noteholders cite no authority for the proposition that segregated
reserves must be established. Nor does Green Hunt Wedlake—though it points to the
fact (which is true, but not to the point) that in Chemtura, I approved such reserves, when
the Chemtura debtors agreed to set them up, to consensually resolve objections. But I did
not rule on the extent to which segregated reserves were necessary, and certainly did not
hold that they were necessary. A single such request imposes burdens on an estate, and if
I were to go beyond existing caselaw and rule that segregated reserves are required,
hundreds or thousands of other creditors in this case and others would be clamoring for
like treatment—resulting in extraordinarily burdensome obligations on this and future
estates, borne by creditors whose claims were allowed.
50 	The Code itself does not impose either requirement, though without creating reserves of some
kind, I have some difficulty seeing how one could provide the statutorily required equal treatment
when dealing with the need to make later distributions on disputed claims that ultimately turn out
to be allowed, especially in cases, like this one, with a liquidating plan.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 33 of 41

-28-
Once more, the Debtors need only take reasonable steps.51 Requests for personal
segregated reserves go way beyond that requirement. 52 Where, as here, the Debtors have
created a very large reserve corresponding in size to the sum of what each creditor with a
disputed liquidated claim asked for, that is eminently reasonable, and all that the law
requires.
4. Wilmington Trust Conflicts
A few objectors—the States of New York and California, and the Town of
Salina—contend that the Plan is unconfirmable by reason of concerns as to future trust
administrator activities of Wilmington Trust—contending that Wilmington Trust’s
current and future roles in these cases (as a present member of the Creditors’ Committee
and future administrator of each of the GUC and Avoidance Trusts) poses a potential
conflict of interest, with a possibility of prejudice to general unsecured creditors.
Assuming, without deciding, that such conflicts would require revisions of the Plan or its
underlying documents in order to make the Plan confirmable, I find no deficiencies that
would necessitate any such plan revisions.
Upon the Effective Date of the Plan if it is confirmed, the Creditors’ Committee
will dissolve for all but a few very limited purposes, and Wilmington Trust will be
resigning from its position as a member and the chair of the Creditors’ Committee. Thus,
as of the Effective Date, Wilmington Trust will be focused on serving trust beneficiaries
in its capacity as GUC and Avoidance Action Trust Administrators. At least in the
51 	See Weiss-Wolf, n.47, above.
52 	Similarly, I also reject the Nova Scotia Noteholders’ contention (Conf. Hrg. Tr. 117-118) that as
holders of disputed claims, they should be given investment control over reserves established to
cover their claims. They cited no authority for such a proposition, and as Creditors’ Committee
counsel understandably responded (id. at 125), investment control “is unheard of.”
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 34 of 41

-29-
foreseeable future, the beneficiaries of the two trusts will be the same—the unsecured
creditors in this case. And while the trust corpuses differ, the underlying objectives of
each trust are fully congruent—to advance the welfare of the Debtors’ unsecured
creditors. While I tend to be very sensitive to conflicts on the part of fiduciaries, I can
find no reason for any concern vis-à-vis any future Wilmington Trust activities here.53
5. Other GUC Issues
The objectors further contend that the GUC Trust lacks sufficient oversight and
controls to protect general unsecured creditors. Once more, while I very much care about
the welfare of Old GM’s creditors, I can find no reason for concern here. The GUC Trust
Agreement provides for various layers of review for all actions taken by the GUC Trust
Administrator, including by the GUC Trust Monitor54 —which is charged with overseeing
the activities of the GUC Trust Administrator—and also the Bankruptcy Court. In
addition, the GUC Trust Agreement provides that the GUC Trust Administrator can be
removed and replaced by a successor administrator upon the filing of a petition to the
Bankruptcy Court by the holders of a majority of the GUC Trust units. I’m comfortable,
accordingly, that these mechanisms provide for sufficient oversight and control to protect
the interests of unsecured creditors.
Also, of course, Wilmington Trust, an indenture trustee for $23 billion in Old GM
bonds, has extensive experience in acting as a fiduciary and in coordinating distributions
53 	Also, as I noted previously, see page 9 above, there is no conflict now between Wilmington
Trust’s duties to unsecured creditors and any duties it might hereafter have to the U.S. Treasury, if
there ever will be.
54 	The Plan provides that the GUC Trust Monitor, like the GUC Trust Administrator, is to be
appointed by the Creditors’ Committee with the consent of the Debtors. Following deliberations
and the consideration of other parties, the Creditors’ Committee determined that its financial
advisor, FTI Consulting, Inc., a well-known turnaround firm, was best suited to serve in the role of
the GUC Trust Monitor.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 35 of 41

-30-
to bondholders and other creditor constituencies. The objectors have put forward no
evidence to suggest a conclusion that it would meet these largely similar fiduciary
obligations in a deficient way. And since Wilmington Trust has been actively involved in
this case since its inception, and in the creation of mechanisms to serve general unsecured
creditors’ interests, it would actually be contrary to the interests of Old GM’s unsecured
creditors to replace Wilmington Trust with an alternative entity, and lose the benefit of its
institutional knowledge about Old GM’s chapter 11 case and plan distribution mechanics.
The objectors may be concerned that Wilmington Trust, as the soon-to-be former
indenture trustee for bondholders with liquidated and Allowed Claims, is focused on
disallowing disputed claims, to their disadvantage, since their claims have not yet been
allowed. But I think the premise underlying that concern is faulty, and that objections of
this character fail sufficiently to take into account the underlying law. AP Services, the
entity that currently manages the Debtors, and has managed claims objections during Old
GM’s chapter 11 case, will continue to assist the GUC Trust and continue to manage
claims allowance litigation after the Effective Date. And as a matter of law, any estate
fiduciary—be it the debtor’s management, board of directors, creditors’ committee, post-
effective date trustee, or the professionals for any of them—has similar duties with
respect to claims: to seek to reduce or disallow claims to the extent that such is
warranted (to ensure that such claims don’t dilute creditor recoveries inappropriately),
and conversely to refrain from contesting claims except where such is warranted.55 In the
absence of a showing that the proposed fiduciary is unwilling or unable to meet those
55 	Cf. Asbestos Settlement Trust v. City of New York (In re Celotex Corp.), 487 F.3d 1320, 1325
(11th Cir. 2007) (The purposes of the Trust are essentially to receive and manage the Trust assets,
to assume the Debtors’ current and future liabilities from asbestos claims, and “to address,
liquidate, resolve, and disallow or allow and pay Asbestos Claims,” quoting In re Celotex Corp.,
204 B.R. 586, 602 (Bankr. M.D. Fla. 1996)).
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 36 of 41

-31-
obligations (of either type), I don’t believe that I should prevent its appointment. Of
course, no claimant may appropriately object to the appointment of any post-Effective
Date administrator out of concern that such administrator will litigate hard against it.
When the claim warrants an objection, that is precisely what any such administrator is
supposed to do.
6. Exculpation Provisions
The State of New York, the Town of Salina, and Green Hunt Wedlake also object
to the “exculpation” provisions under the Plan, under which specified major participants
in the case, and their professionals,56 obtain what’s in substance a qualified immunity for
acts undertaken in connection with the case. New York57 and the Town of Salina58 object
to provisions under which the Old GM estate releases any claims it might have, while all
three object to the provision insofar as it provides that third parties (creditors and equity
security holders) would be bound by such a result.
I agree in part. The releases in Article 12.5 by the Old GM estate are
unobjectionable, but the releases in Article 12.6 are third-party releases impermissible
under applicable Second Circuit law, and earlier rulings on my part following the Second
Circuit’s rulings. But as I well understand the abuses that such exculpation provisions
are intended to address, and since most of the claims that creditors and stockholders
might assert would actually belong to the Estate, I’ll approve gatekeeping provisions to
protect the exculpated parties from claims asserted by creditors and stockholders that
actually belong to the Estate, and provide (to the extent I have subject matter jurisdiction
56 	See pages 13 and 15, respectively.
57 	New York Obj. at 13.
58 	Salina Obj. at 21-24.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 37 of 41

-32-
and elect to exercise it) that I’ll personally hear any such claims, to separate meritorious
claims from those that are merely harassment.
I’ve dealt with this issue five times before, in my earlier decisions in Chemtura,59
DBSD, 60 and three times in Adelphia,61 and needn’t discuss it at comparable length here.
Releases by estates, on the one hand, and by third parties on the other, are very different,
and are governed by different principles of law. Releases by estates involve a give-up of
potential rights that are owned by the estate, and are perfectly permissible in a plan, either
as parts of plan settlements or otherwise,62 though the court must satisfy itself (at least if
anyone raises the issue) that the give-up is an appropriate exercise of business judgment,
and, possibly, in the best interests of the estate.63
By contrast, claims owned by third parties, such as creditors and stockholders, are
subject to different law and considerations. As I explained in the Adelphia Confirmation
Decision,64 while the Code provides that the discharge of a debtor’s liabilities to its
59 	In re Chemtura Corp., 439 B.R. 561, 609-614 (Bankr. S.D.N.Y. 2010).
60 	DBSD, n.34 above, 419 B.R. at 217-220.
61 	See In re Adelphia Communications Corp., 368 B.R. 140, 263-270 (Bankr. S.D.N.Y. 2007) (the
“Adelphia Confirmation Decision”); In re Adelphia Communications Corp., 364 B.R. 518, 528-
530 (Bankr. S.D.N.Y. 2007) (the “Adelphia D&O Policies Settlement Decision”) and, to a lesser
extent, the Adelphia Non-Fiduciary Fees Decision, 441 B.R. at 17 n.41.
62 	Nothing in the Code prohibits them, and at least many will be affirmatively authorized under
section 1123(b) of the Code, which covers matters that may be included in a plan. Section 1123
provides, among other things, that a plan may provide for “the settlement or adjustment of any
claim … belonging to the debtor or to the estate,” or, alternatively, provide for “the retention and
enforcement by the debtor, by the trustee, or by a representative of the estate appointed for such
purpose, of any such claim….” Section 1123(b)(3).
63 	In DBSD, I found that the debtor releases were both an appropriate exercise of business judgment
and in the best interests of the estate, see 419 B.R. at 217, and in Chemtura, I recognized the issue
but didn’t need to decide it. See 439 B.R. at 612 n.224 (“Irrespective of whether the release of
claims of that character [those “given by the Debtors of claims the Debtors themselves own”] is
governed by a best interests of the estate or merely a business judgment standard, I see no basis for
finding such releases to be inappropriate.”). Here I likewise don’t need to decide the appropriate
standard, since I expressly find, as a mixed question of fact and law, that the Old GM estate’s
release of claims it owns satisfies both requirements.
64 	See 368 B.R. at 266.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 38 of 41

-33-
creditors doesn’t also result in a discharge of nondebtors’ liabilities on those obligations
to such creditors65 (and, at least impliedly, any other nondebtor obligations to such
creditors, or other third parties), the Code doesn’t say that provisions in plans providing
for such are impermissible. And it says, in section 1123(b)(6), that a plan may “include
any other appropriate provision not inconsistent with the applicable provisions of this
title.” Although (since the Code is silent on the matter) third-party releases aren’t
“inconsistent with the applicable provisions of this title,” the Second Circuit has ruled
that they’re permissible only in rare cases, with appropriate consent or under
circumstances that can be regarded as unique, some of which the Circuit listed.66 But
where those circumstances haven’t been shown, third-party releases can’t be found to be
“appropriate.”67
65 	See Bankruptcy Code section 524(e).
66 	See Deutche Bank AG v. Metromedia Fiber Network, Inc. (In re Metromedia Fiber Network, Inc.),
416 F.3d 136, 142 (2d Cir. 2005) (“Metromedia”); Adelphia Confirmation Decision, 368 B.R. at
266-270 (explaining and applying Metromedia).
67 	See Adelphia Non-Fiduciary Fees Decision, 441 B.R. at 17 & n.41. As I noted in the Adelphia
Confirmation Decision, see 368 B.R. at 267, the limitations on third-party releases apply to both
pre- and post-petition events. Even though it’s long been the custom in the bankruptcy
community to make distinctions between releases involving pre- and postpetition conduct (and
postpetition releases are less subject to abuse), “after Metromedia, limitation to postpetition
events, by itself, is insufficient to justify a third-party release.” Id. At least up to now, the Circuit
hasn’t distinguished between them.
As I observed in Chemtura, citing my earlier decision in DBSD, there are good reasons why plan
proponents put in the provisions that I now feel bound to invalidate:
Exculpation provisions are included so frequently in chapter
11 plans because stakeholders all too often blame others for
failures to get the recoveries they desire; seek vengeance
against other parties; or simply wish to second guess the
decisionmakers in the chapter 11 case.
439 B.R. at 610. And that’s so even though most of the claims that might be brought don’t belong
to individual stakeholders, but belong instead to the debtor estates—which quite properly can, and
do, provide exculpation, carefully drafted (as in this case) to carve out from any protection matters
unworthy of protection, such as intentional misconduct or gross negligence.
Strong arguments can be made that the bankruptcy system would be strengthened if plan
fiduciaries were more broadly protected from claims by disgruntled or harassing stakeholders,
such as by the provisions we now have for exculpation granted by estates, which the U.S. Trustee
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 39 of 41

-34-
As just noted, the Circuit listed certain circumstances that would justify third-
party releases, one of which is applicable to other releases in the Plan—relating to
asbestos-related claims, none of which were objected to here. But none of the qualifying
circumstances has been even argued to be applicable to the exculpation provisions here.
I well recognize how hard the Debtors, the Chapter 11 Fiduciaries, and their
professionals worked on this case, and how, with thousands of disappointed creditors and
stockholders out there to second guess their actions, they would like to be protected for
their good faith actions in maximizing value and bringing this case to a successful
conclusion. But I’m constrained by existing law to place some limits on their protection.
I’ve spoken many times, including earlier in this very case,68 of the importance of stare
decisis and predictability in commercial cases in this district, and thus must remain
consistent with my earlier decisions, not to mention the Circuit’s. Accordingly, the
exculpation provisions of Article 12.669 must be fixed, consistent with Chemtura, DBSD,
and the Adelphia decisions.
With that said, I recognize the legitimate concerns that prompted the exculpation
provisions that I’m trimming. And as in my earlier decisions,70 I’ll approve language that
addresses those concerns, so long as it falls short of an impermissible third-party release.
Article 12.6 may include language, if Plan supporters wish, requiring third-party claims
of the type now covered to be first brought before me, for a threshold inquiry to confirm
that they actually belong to the third party, and don’t belong, instead, to the Estate. And
Program carefully monitors. But until Congress or the Circuit gives me the authority to authorize
exculpation from claims by third parties, I think I must rule in accordance with existing caselaw.
68 	See the 363 Decision, 407 B.R. at 486-487 & n.19, 504.
69 	Article 12.5 is fine, and for the avoidance of doubt, objections to Article 12.5 are overruled.
70 	See, e.g., Chemtura, 439 B.R. at 612.
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 40 of 41

-35-
it may further provide, if Plan supporters wish, that, subject to any applicable subject
matter jurisdiction limitations, I’ll at least initially have exclusive jurisdiction to be the
forum for any covered litigation brought by any creditor or equity security holder, so long
as I’m free to abstain and consider whether that litigation would be better conducted
elsewhere.
Since the Plan has the Self-Correcting Feature to which I previously referred, the
Plan is confirmable notwithstanding the changes that I require here. And the Plan will be
confirmed, so long as I receive revised Plan language substantially in conformity with
this Decision.
7. Miscellaneous Objections
I don’t think that I should lengthen this Decision further by specifically
addressing any of the other objections that were filed, or other arguments or argument
variants that were made in connection with the objections discussed above. I’ve
canvassed them and satisfied myself that no material objections other than those I’ve
specifically addressed were raised and have merit. To the extent those objections were
not expressly addressed in this Decision, they’re overruled.
Conclusion
For the foregoing reasons, the Plan will be confirmed, subject to inclusion of the
Plan revisions announced on the record and as required under this Decision. The Debtors
are to settle an order in accordance with this Decision. The time to appeal will run from
the date of entry of the resulting order, and not from the date of this Decision.
Dated: New York, New York 	s/Robert E. Gerber
March 7th, 2011 	United States Bankruptcy Judge
09-50026-mg Doc 9638 Filed 03/07/11 Entered 03/07/11 15:24:34 Main Document
Pg 41 of 41