New United Motor Manufacturing Inc. on Wednesday argued that its case against the bankrupt remains of General Motors Corp. alleging contract breaches associated with halting orders for the Pontiac Vibe was strong enough to merit discovery.
A lawyer for Nummi — a former joint venture of GM and Toyota Motor Corp. — contested the debtor's efforts to win dismissal of the suit, which seeks as much as $500 million, before Judge Robert E. Gerber in the U.S. Bankruptcy Court for the Southern District of New York.
"Given what's at stake, we'd like to live to fight for another day," said the attorney, Mark E. McKane of Kirkland & Ellis LLP. "We have spelled out very precise allegations."
Motors Liquidation Co., the GM shell that remains under Chapter 11, argues that it should not be on the hook for Nummi's damages associated with the automaker's decision to scrap the Pontiac brand and the Vibe model.
Motors Liquidation attorney Anthony J. Albanese of Weil Gotshal & Manges LLP, told the judge that the supply agreement at issue did not include any promises by GM to order specific numbers of vehicles. Rather, those details would have been laid out in later sales agreements, he said.
McKane, however, countered that the venture — which operated a 5.5 million square foot plant in Fremont, Calif. — had made hundreds of millions of dollars in improvements under a deal to supply 65,000 Vibes per year.
Although GM and its affiliates ultimately opted to dump the Pontiac brand following the automaker's bankruptcy filing in 2009, Nummi was under the impression that GM was considering "rebadging" the Vibe under a different brand, McKane said.
Nummi lodged the adversary suit in the Motors Liquidation bankruptcy case in November
2010, claiming that it ultimately collapsed as a result of GM's not making good on the contract.
The company is also seeking to hold Motors Liquidation liable for a share of $200 million in workers' compensation liabilities as well as expenses related to cleaning up environmental contamination at the Nummi plant, which GM owned between 1960 and 1982.
Established in 1984, Nummi produced some 417,000 vehicles and employed over 5,700 workers at its peak in 2005, according to the company.
But the venture faltered, with GM pulling out in June 2009 shortly after filing for bankruptcy, and Toyota deciding to cut its ties with the plant that August.
In its complaint, Toyota alleges that GM reaped billions of dollars worth of business knowledge and vehicle sales from the partnership but failed to honor contracts to purchase Vibes through 2012 and to keep Nummi viable.
Toyota has also blamed GM for the collapse of the joint manufacturing venture, saying that it spent about $100 million in developing the Vibe, which lawyers described as being similar to the Toyota Matrix.
In 2009, a faltering GM sought Chapter 11 protection and sold the bulk of its business assets to a new, largely government-owned entity called General Motors LLC through Section 363 of the Bankruptcy Code.
The remnants of the auto giant remained under Chapter 11. A hearing on the approval of the bankrupt shell's liquidation plan is set for March.
Toyota is represented by Victor A. Vilaplana, Matthew J. Riopelle and Jeffrey A. Soble of Foley & Lardner LLP. Nummi is represented by Richard M. Cieri, Ray C. Schrock and Mark E. McKane of Kirkland & Ellis LLP.
Motors Liquidation is represented by Weil Gotshal & Manges LLP.
The case is New United Motor Manufacturing Inc. v. Motors Liquidation Co., case number 10-05016, in the U.S. Bankruptcy Court for the Southern District of New York.
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