Campbell v. Motors Liquidation Co. (In re Motors Liquidation Co., et al. f/k/a General Motors Corp.)

428 B.R. 43 (2010)

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Campbell v. Motors Liquidation Co. (In re Motors Liquidation Co., et al. f/k/a General Motors Corp.)

United States District Court for the Southern District of New York
428 B.R. 43 (2010)

Facts

In June 2009, General Motors Corporation and affiliated entities (collectively, GM) (debtors) filed for chapter 11 bankruptcy. GM simultaneously sought approval under 11 U.S.C. § 363 to sell substantially all of its assets to NGMCO, Inc. (New GM), a purchaser sponsored by the United States Treasury, for over $90 billion in consideration. The proposed sale agreement made clear that New GM would not pursue the § 363 transaction unless GM’s assets were sold free and clear of liabilities that New GM had not agreed to assume, including existing products-liability claims against GM held by claimants including Callan Campbell (the claimants). The claimants objected to the proposed § 363 transaction, arguing, among other things, that 11 U.S.C. § 363(f) did not authorize a sale free and clear of their products-liability claims. The bankruptcy court approved the sale after finding that the proposed § 363 transaction had been negotiated in good faith and that the only alternative to the sale would have been liquidation, which would have negatively impacted the communities in which GM operated and GM’s creditors, employees, and suppliers. The bankruptcy court’s order approving the § 363 transaction and sale order specifically stated that New GM was a good-faith purchaser. The claimants appealed the sale order in federal district court without seeking a stay pending appeal of the sale order. Other objectors to the transaction sought a stay pending appeal, but the stay was denied. The § 363 transaction closed in July 2009.

Rule of Law

Issue

Holding and Reasoning (Buchwald, J.)

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