In GM bankruptcy, an ex-con and hedge funds find common ground

Sun Oct 12, 2014 7:24am EDT
 
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By Nick Brown and Jessica Dye

NEW YORK (Reuters) - Roger Dean Gillispie, a former General Motors security guard, spent 20 years in an Ohio prison for rape until a federal court ordered him released in 2011. Now he wants to sue GM for allegedly helping to frame him, and he’s getting support from an unlikely source: hedge funds.

Gillispie, who is waiting to see if he will face a new criminal trial, has petitioned the U.S. Bankruptcy Court in New York for permission to sue GM. The court, which is overseeing claims against the company in the wake of its 2009 Chapter 11 reorganization, must decide if Gillispie can seek damages from so-called New GM, the profitable company that emerged from bankruptcy, or must go after Old GM, which is a trust composed of limited assets to settle past claims against the carmaker.

He is making essentially the same argument as owners of older cars recalled in GM's ignition-switch debacle this year, who have filed more than 100 lawsuits seeking class action status and want permission from the bankruptcy court to pursue deep-pocketed New GM.

The legal odyssey showcases the unexpected alliances forged by GM's split into two legal entities. Under the 2009 bankruptcy agreement, New GM is largely shielded from liabilities arising before it was created. Gillispie and the car owners argue they could not have known about key facts central to their cases before the GM bankruptcy and should be able to sue the new company.

Hedge funds with claims on the Old GM assets also prefer new claimants direct their claims toward New GM.

A lawyer representing the switch plaintiffs in bankruptcy court declined to comment. Those plaintiffs have not weighed in on Gillispie's case, although they are separately arguing that New GM's attempts to foist their claims onto Old GM would violate their due-process rights, too.

GM spokesman Jim Cain said "we do not believe New GM is in any way responsible" for the events alleged by Gillispie, which would have occurred 18 years before New GM existed.

GM argued in court papers that if Gillispie or the switch plaintiffs have claims stemming from pre-2009 conduct, they cannot proceed against New GM.   Continued...

 
The General Motors logo is seen outside its headquarters at the Renaissance Center in Detroit, Michigan in this file photograph taken August 25, 2009. REUTERS/Jeff Kowalsky/Files