NEW YORK (Legal Newsline) - The federal government has entered into a an agreement with a successor trust to the Chapter 11 debtor Motors Liquidation Company ("Old GM"), formerly known as General Motors Corporation.
The settlement involved the bankrupt company's environmental liabilities arising from its pollution of the Diamond Alkali Superfund Site in New Jersey, the Kane & Lombard Street Drum Superfund Site in Maryland and the Hayford Bridge Road Groundwater Superfund Site in Missouri. The Settlement Agreement was filed Monday in Manhattan bankruptcy court.
The arrangement settles claims brought by the government against Old GM under the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as the Superfund Statute, to recover the cleanup costs of the Environmental Protection Agency at the three sites. The EPA will receive allowed bankruptcy claims collectively exceeding $20.9 million to settle environmental claims at these sites. These allowed claims will be paid in stock and warrants of General Motors Corp. (also known as "New GM") in an amount to be determined through the bankruptcy.
The federal government anticipates that, as a function of bankruptcy law, the New GM stock and warrants received by EPA will have a cash value of less than the face amount of EPA's allowed claim. Certain unnamed third parties will also perform cleanup work valued at $2.89 million at the sites. The Diamond Alkali Superfund Site is located in northern New Jersey and includes a 17-mile portion of the Passaic River, Newark Bay, and portions of the Hackensack River, the Arthur Kill and the Kill Van Kull.
Old GM - then the second-largest automotive manufacturer in the world - and three wholly-owned subsidiaries, filed Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York in June 2009. Old GM also sold substantially all of its assets to General Motors Company ("New GM"), which was approved by the Bankruptcy Court in July 2009.
Old GM subsequently dissolved. Its remaining assets and liabilities went to various successor trusts.
The United States filed proofs of claim against Old GM and its affiliated debtors for environmental liabilities at over 100 sites. The United States also sought civil monetary penalties for violations of The Resource Conservation and Recovery Act and the Clean Air Act.
According to the DOJ, this settlement is the tenth in a series of settlements of Old GM's environmental liabilities that have recovered more than $860 million in cash, allowed general unsecured claims, and other assets for cleanup of contaminated sites across the nation and an environmental response trust created to remediate and redevelop contaminated properties formerly owned by Old GM.