General Motors 2011 Annual Report Download - page 157

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
and to facilitate winding down their operations in an orderly fashion by December 31, 2009 or such other date as GMCL approved but
no later than on October 31, 2010. The Plaintiff Dealers allege that the Dealer Sales and Service Agreements were wrongly terminated
by GMCL and that GMCL failed to comply with certain disclosure obligations, breached its statutory duty of fair dealing and
unlawfully interfered with the Plaintiff Dealers’ statutory right to associate in an attempt to coerce the Plaintiff Dealers into accepting
the wind-down agreements. The Plaintiff Dealers seek damages and assert that the wind-down agreements are rescindable. The
Plaintiff Dealers’ initial pleading makes reference to a claim “not exceeding” CAD $750 million, without explanation of any specific
measure of damages. On March 1, 2011 the Court approved certification of a class for the purpose of deciding a number of
specifically defined issues, including: (1) whether GMCL breached its obligation of “good faith” in offering the wind-down
agreements; (2) whether GMCL interfered with the Plaintiff Dealers’ rights of free association; (3) whether GMCL was obligated to
provide a disclosure statement and/or disclose more specific information regarding its restructuring plans in connection with
proffering the wind-down agreements; and (4) assuming liability, whether the Plaintiff Dealers can recover damages in the aggregate
(as opposed to proving individual damages). On June 22, 2011 the court granted GMCL permission to appeal the class certification
decision. The current prospects for liability are uncertain, but because liability is not deemed probable, we have no accrual relating to
this litigation. We cannot estimate the range of reasonably possible loss in the event of liability, as the case presents a variety of
different legal theories, none of which GMCL believes are valid.
On April 6, 2010 the UAW filed suit against us in the U.S. District Court for the Eastern District of Michigan claiming that we
breached an obligation to contribute $450 million to the New VEBA. The UAW alleges that we were contractually required to make
this contribution. The reasonably possible loss as defined by ASC 450 “Contingencies” is $450 million, which is the amount claimed,
but we believe that the claim is without merit and we have no accrual relating to this litigation. We filed a motion in the U.S.
Bankruptcy Court for the Southern District of New York (Bankruptcy Court) asserting that the UAW’s claim is barred by the
Bankruptcy Court approved 2009 UAW Retiree Settlement Agreement and by other orders issued by the Bankruptcy Court that
preclude additional GM contributions to the New VEBA. We also maintain that Delphi’s bankruptcy plan of reorganization did not
fulfill the applicable conditions of the relevant agreement and therefore payment would not be due even in the absence of the 2009
UAW Retiree Settlement Agreement. On August 23, 2011, the Bankruptcy Court issued an opinion abstaining from hearing the case,
which will accordingly be litigated in Federal Court in U.S. District Court for the Eastern District of Michigan.
Liability Related to Contingently Issuable Shares
Under the Amended and Restated Master Sale and Purchase Agreement, as amended between us and Old GM and certain of its
direct and indirect subsidiaries, we were obligated to issue additional shares of our common stock to MLC (Adjustment Shares) in the
event that allowed general unsecured claims against MLC, as estimated by the Bankruptcy Court, exceed $35.0 billion. Following the
dissolution of MLC on December 15, 2011, any Adjustment Shares we are obligated to issue will be issuable to the GUC Trust. The
maximum number of Adjustment Shares issuable is 30 million shares (subject to adjustment to take into account stock dividends,
stock splits and other transactions). The number of Adjustment Shares to be issued is calculated based on the extent to which
estimated general unsecured claims exceed $35.0 billion with the maximum number of Adjustment Shares issued if estimated general
unsecured claims total $42.0 billion or more. At December 31, 2011 and 2010 we concluded it was not probable that general
unsecured claims would exceed $35.0 billion. We believe it is reasonably possible that general unsecured claims allowed against
MLC will range between $32.5 billion and $36.0 billion.
GME Planned Spending Guarantee
As part of our Opel/Vauxhall restructuring plan agreed to with European labor representatives, we have committed to achieving
specified milestones associated with planned spending from 2011 to 2014 on certain product programs. If we fail to accomplish the
requirements set out under the agreement, we will be required to pay certain amounts up to Euro 265 million for each of those years,
and/or interest on those amounts, to our employees. Certain inventory with a carrying amount of $209 million and $193 million at
December 31, 2011 and 2010 was pledged as collateral under the agreement. Through December 31, 2011 spending was sufficient to
meet the current requirements under the agreement and the specified milestones have been accomplished. Management has the intent
and believes it has the ability to meet the future requirements under the agreement.
General Motors Company 2011 Annual Report 155