NEW YORK (Bloomberg) -- The trust liquidating General Motors Co.'s old assets in bankruptcy said settlement talks with a group of note holders failed, in a lawsuit over how hedge funds made claims in the company's 2009 bankruptcy.
The Motors Liquidation Co. GUC Trust, which is liquidating old GM assets in Manhattan bankruptcy court, had participated in mediation with holders of notes in a Nova Scotia unit, according to court papers filed Monday.
GM CFO Daniel Ammann has testified in past hearings that the lawsuit over the Canadian notes could harm the company by as much as $918 million.
Mediation "has now concluded without the parties reaching a settlement," lawyers for the trust wrote.
The trust sued four hedge funds in Manhattan bankruptcy court last March, alleging that while GM was preparing its bankruptcy filing on June 1, 2009, four hedge funds, which held notes in a Canadian unit of GM, "saw an eleventh-hour opportunity for profit and pounced."
The trust seeks to have claims for holders of notes in the Nova Scotia unit disallowed or reduced, saying the hedge funds seek more than three times what GM actually owed them.
Motors Liquidation Co.'s bankruptcy plan repays general unsecured creditors through a trust with stock and two series of warrants, according to court papers.
The GUC Trust brought the lawsuit on behalf of general unsecured creditors.
Ammann, Morgan Stanley's former head of industrials investment banking, testified in September in a trial over how the bankruptcy treats general creditors and hedge funds that negotiated a $3 billion claim for holders of the notes.