8-KMaterial AgreementsExhibits & Filings

General Motors Co 8-K Report, Material Agreement (Sep 17, 2009)

Filed September 17, 2009For Securities:GM

Summary

General Motors Company (GM) filed an 8-K on September 16, 2009, reporting on a significant material definitive agreement. On September 10, 2009, GM entered into a Settlement Agreement with Motors Liquidation Company (formerly General Motors Corporation) and two major unions, the IUE-CWA and the USW. This agreement aims to resolve claims related to retiree health care and basic life insurance benefits, particularly for post-age-65 retirees and surviving spouses, as well as certain under-age-65 retirees. The company is expected to take on certain liabilities and obligations, with an estimated total liability of approximately $1 billion for these benefits. The core of the agreement involves the unions releasing claims against GM and Motors Liquidation Company in exchange for an allowed pre-petition unsecured claim in the Motors Liquidation Company's Chapter 11 proceedings. GM has also agreed to continue providing retiree health care through the end of 2009 and to assume specific union agreements, including modifications to the "Moraine Closure Agreement." Additionally, GM will provide supplemental pension payments to certain retired employees if their benefits from the PBGC or other entities fall short of amounts promised under the Delphi Hourly Retirement Plan as of July 22, 2009. This settlement is a crucial step in GM's restructuring efforts and its emergence from bankruptcy, aiming to provide clarity and closure on significant legacy costs.

Key Highlights

  • 1GM entered into a Material Definitive Agreement on September 10, 2009, with Motors Liquidation Company, IUE-CWA, and USW.
  • 2The agreement resolves claims concerning retiree health care and basic life insurance benefits.
  • 3Unions will receive a $1 billion allowed pre-petition unsecured claim in Motors Liquidation Company's Chapter 11 proceedings.
  • 4GM will continue providing retiree health care for eligible union retirees through December 31, 2009.
  • 5GM assumes the 'Moraine Closure Agreement' with modifications.
  • 6GM will provide supplemental pension payments to certain retired employees to ensure they receive promised benefits.
  • 7The estimated total liability for these benefits is approximately $1 billion.
  • 8The agreement is contingent upon approval by the Bankruptcy Court.

Frequently Asked Questions

The primary purpose of the Settlement Agreement is to resolve outstanding claims and liabilities related to retiree health care and basic life insurance benefits between General Motors Company, Motors Liquidation Company, and key unions (IUE-CWA and USW). This aims to clear legacy costs and facilitate GM's restructuring.

GM estimates a total liability of approximately $1 billion related to the benefits covered under this agreement. This includes potential supplemental pension payments and assuming certain retiree health and life insurance obligations.

Yes, the Settlement Agreement is expressly conditioned upon and will not become effective until it is approved by the Bankruptcy Court overseeing the Chapter 11 Proceedings of Motors Liquidation Company.

The agreement provides a framework for managing significant legacy costs associated with retiree benefits, which is crucial for GM's financial stability and operational restructuring. It ensures continued provision of health care for certain retirees through the end of 2009 and addresses pension benefit shortfalls.