Opinion ID: 2771725
Heading Depth: 2
Heading Rank: 1

Heading: General Motors’ Chapter 11 Bankruptcy Filing

Text: The mistake went unnoticed until General Motors’ bankruptcy in 2009. After General Motors filed for chapter 11 reorganization, JPMorgan informed the Committee of Unsecured Creditors (the “Committee”) that a UCC‐3 termination statement relating to the Term Loan had been inadvertently filed in October 2008. JPMorgan explained that it had intended to terminate only liens related to the Synthetic Lease and stated that the filing was therefore unauthorized and ineffective. On July 31, 2009, the Committee commenced the underlying action against JPMorgan in the United States Bankruptcy Court for the Southern District of 6 New York. The Committee sought a determination that, despite the error, the UCC‐3 termination statement was effective to terminate the Term Loan security interest and render JPMorgan an unsecured creditor on par with the other General Motors unsecured creditors. JPMorgan disagreed, reasoning that the UCC‐3 termination statement was unauthorized and therefore ineffective because no one at JPMorgan, General Motors, or their law firms had intended that the Term Loan security interest be terminated. On cross‐motions for summary judgment, the Bankruptcy Court concluded that the UCC‐3 filing was unauthorized and therefore not effective to terminate the Term Loan security interest. In re Motors Liquidation Co., 486 B.R. at 647–48.