A group of bondholders calling itself "The Unofficial Committee of Family & Dissident GM Bondholders" claimed via paperwork submitted in court Friday that GM's plan to sell its best assets would force the bondholders to face "disproportionate losses."
The committee represents the interests of more than 1500 bondholders -- most of which are family and non-institutional bondholders -- and their $400 million in GM bonds. The group wants the court to reject GM's planned asset sale -- the same section 363-style sale that Chrysler successfully completed during its bankruptcy tenure -- and force the automaker to formulate an accelerated bankruptcy reorganization plan instead.
"This private deal was struck in a back room, without any transparency, without any meaningful opportunity for the bondholders represented by the (unofficial committee) to participate in the process," the group said in its court papers.
"The new GM could have been created fairly, in accordance with the law, transparently, and urgently, with a plan of reorganization," it said. "It can still be done in that proper manner."
The bondholders are accusing GM of pursuing a "sub rosa" reorganization plan, similar to accusations dissident bondholders made against Chrysler earlier this year. The Unofficial Committee of Family & Dissident Bondholders is seeking to become an official committee this week. It is being represented by a Washington, D.C.-based law firm, Patton Boggs, according to court documents.
Despite the bondholders' brave attempts at taking on GM -- and President Obama's auto task force -- the precedent that was set by the Supreme Court during Chrysler's bankruptcy doesn't bode well for them.