General Motors 2012 Annual Report Download - page 150

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
loan from Old GM to GMCL immediately prior to the Old GM bankruptcy filing. That loan was subsequently repaid. Pursuant to the
terms of the Lock-Up Agreement, the Consent Fee did not reduce the principal amount outstanding under the Nova Scotia Notes or
the Guaranty. We acquired Old GM’s interest in the Lock-Up Agreement in 2009.
In the Nova Scotia Claims Litigation the Noteholders seek an allowed claim in the Old GM bankruptcy based on the Guaranty. The
trustee of Nova Scotia Finance seeks an allowed claim in the amount of the deficiency between Nova Scotia Finance’s assets and
liabilities by reason of the fact that it is an unlimited liability company and Old GM was its sole shareholder. The claim asserted by
the trustee includes sums allegedly owed by Nova Scotia Finance to us by reason of currency swaps entered into between Old GM and
Nova Scotia Finance which we contend we acquired from Old GM in 2009. Allowance of the claims is opposed by the GUC Trust
which asserts that the claims of the trustee and Noteholders are duplicative, that they should be reduced by the amount of the Consent
Fee and/or that they should be equitably subordinated or equitably disallowed by reason of alleged inequitable conduct by the
Noteholders. In support of this position the GUC Trust has asserted that the Lock-Up Agreement is void because it was not approved
by the Bankruptcy Court and was funded by Old GM, that we did not acquire MLC’s interest in the Lock-Up Agreements and
currency swaps and that other aspects of the sale of assets to us on July 10, 2009 may be adjusted to permit disallowance or reduction
of the claims of the Noteholders and the trustee. The trial has commenced but the timing of any decision is uncertain.
Although we believe the positions taken by the GUC Trust are without merit, it is reasonably possible that the Bankruptcy Court
will issue rulings adverse to our interest in the Nova Scotia Claims Litigation. Such rulings could lead to subsequent claims which,
although we believe would be without merit, could adversely impact GMCL’s compromise of the intercompany loans. It is impossible
to estimate the reasonably possible loss which would depend upon a variety of factors including the outcome of additional litigation.
However the compromise of the intercompany loans for CAD $399 million resulted in a savings to GMCL of CAD $935 million
(equivalent to $940 million) which we believe represents a reasonable estimate of the approximate amount of the maximum
reasonably possible loss.
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 $186 million and $209 million at
December 31, 2012 and 2011 was pledged as collateral under the agreement. Through December 31, 2012 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.
Asset Retirement Obligations
Asset retirement obligations relate to legal obligations associated with retirement of tangible long-lived assets that result from
acquisition, construction, development or normal operation of a long-lived asset. An analysis is performed of such obligations
associated with all real property owned or leased, including facilities, warehouses and offices. Estimates of conditional asset
retirement obligations relate, in the case of owned properties, to costs estimated to be necessary for the legally required removal or
remediation of various regulated materials, primarily asbestos. Asbestos abatement was estimated using site-specific surveys where
available and a per square foot estimate where surveys were unavailable. For leased properties such obligations relate to the estimated
cost of contractually required property restoration. At December 31, 2012 and 2011 accruals for asset retirement obligations were
$116 million and $99 million.
General Motors Company 2012 ANNUAL REPORT 147