General Motors 2015 Annual Report Download - page 92

Table of Contents
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to GM Korea's position. GM Korea appealed to the Supreme Court of the Republic of Korea (Supreme Court) and initiated a constitutional challenge to the
adverse interpretation of the relevant statute. In December 2013 the Supreme Court rendered a decision in a case involving another company not affiliated
with us that addressed many of the issues presented in the cases pending against GM Korea and resolved many of them in a manner which we believe is
favorable to GM Korea. In particular, while the Supreme Court held that fixed bonuses should be included in the calculation of Ordinary Wages, it also held
that claims for retroactive application of this rule would be barred under certain circumstances. On May 29, 2014 the Supreme Court rendered its decision
with respect to the case involving the five GM Korea hourly employees and remanded the case to the Seoul High Court consistent with its December 2013
ruling. This case was decided by the Seoul High Court on October 30, 2015 in GM Korea's favor. Plaintiffs appealed to the Supreme Court. In July 2014 GM
Korea and its labor union also agreed to include bonuses and certain allowances in Ordinary Wages retroactive to March 1, 2014. Therefore our accrual
related to these cases was reclassified from a contingent liability to the Pensions liability. We estimate our reasonably possible loss in excess of amounts
accrued to be 585 billion South Korean Won (equivalent to $499 million) at December 31, 2015, which relates to periods before March 1, 2014. We are also
party to litigation with current and former salaried employees over allegations relating to Ordinary Wages regulation. On November 26 and 27, 2015 the
Supreme Court remanded two salary cases to the Seoul High Court for a review of the merits. At December 31, 2015 we identified a reasonably possible loss
for salary cases in excess of the amounts accrued to be 174 billion South Korean Won (equivalent to $148 million). Both the scope of claims asserted and GM
Korea's assessment of any or all of the individual claim elements may change if new information becomes available. These cases are currently pending before
various courts in Korea.
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In July 2014 GM Financial was served with a subpoena by the U.S. Department of Justice directing GM Financial to produce certain documents relating to
the origination and securitization of sub-prime automobile loans by GM Financial and its subsidiaries and affiliates since 2007 in connection with an
investigation by the U.S. Department of Justice in contemplation of a civil proceeding for potential violations of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989. Among other matters, the subpoena requests information relating to the underwriting criteria used to originate these
automobile loans and the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the
automobile loans. GM Financial was subsequently served with additional investigative subpoenas from state attorneys general and other governmental
offices to produce documents relating to its retail automobile loan business and securitization of automobile loans. In October 2014 GM Financial received a
document request from the SEC in connection with its investigation into certain practices in sub-prime automobile loan securitization. GM Financial is
investigating these matters internally and believes it is cooperating with all requests. These investigations are ongoing and could in the future result in the
imposition of damages, fines or civil or criminal claims and/or penalties. No assurance can be given that the ultimate outcome of the investigations or any
resulting proceedings would not materially and adversely affect GM Financial or any of its subsidiaries and affiliates.
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Various other legal actions, governmental investigations, claims and proceedings are pending against us including matters arising out of alleged product
defects; employment-related matters; governmental regulations relating to safety, emissions and fuel economy; product warranties; financial services; dealer,
supplier and other contractual relationships; government regulations relating to payments to foreign companies; tax-related matters not subject to the
provision of ASC 740, "Income Taxes" (indirect tax-related matters); and environmental matters.
Indirect tax-related matters are being litigated globally pertaining to value added taxes, customs, duties, sales, property taxes and other non-income tax
related tax exposures. The various non-U.S. labor-related matters include claims from current and former employees related to alleged unpaid wage, benefit,
severance and other compensation matters. Certain South American administrative proceedings are indirect tax-related and may require that we deposit funds
in escrow. Escrow deposits may range from $400 million to $600 million. Some of the matters may involve compensatory, punitive or other treble damage
claims, environmental remediation programs or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that could
not be reasonably estimated at December 31, 2015. We believe that appropriate accruals have been established for losses that are probable and can be
reasonably estimated. For indirect tax matters we estimate our reasonably possible loss in excess of amounts accrued to be up to approximately $850 million.
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