GM Asks Judge to Toss Bankrupt Supplier's Lawsuit
October 11 2016 - 4:14PM
Dow Jones News
By Sarah Chaney
General Motors Co. is asking a judge to halt a litigation battle
with bankrupt auto-parts supplier Clark-Cutler-McDermott Co.
In recent court filings, GM seeks the dismissal of CCM's lawsuit
accusing the auto maker of lying in pricing negotiations and
tricking CCM into entering a contract that saddled the
Massachusetts company with debt in the months leading up to its
bankruptcy filing.
CCM's complaint "is nothing but a brazen attempt to avoid the
consequences of its poor business decisions and management by
(wrongly) blaming GM," the company said in a court filing with the
U.S. Bankruptcy Court in Massachusetts.
GM added that the complaint should be dismissed because it is
based on legal arguments that are "fatally flawed" and aren't
supported by facts.
Auto-parts manufacturer CCM filed for chapter 11 protection on
July 7, shutting down several weeks later. The 115-year-old company
-- a GM "Supplier of the Year" four times in the last seven years
-- blamed its filing on a money-losing contract with GM, which
accounted for about 80% of CCM's business.
According to CCM's complaint, filed in bankruptcy court last
month, GM executives insincerely negotiated new pricing for auto
parts "so that it could keep [Clark-Cutler-McDermott] in business
just long enough for GM to line up new suppliers." CCM added that
GM was looking out for its own interests rather than those of its
longstanding business partner.
In GM's request to dismiss the case, the auto maker says the
pricing agreement explicitly allowed it to look for other
suppliers.
CCM's lawsuit also accuses GM officials of breaking a promise to
negotiate in "good faith" over auto-parts pricing. The lawsuit said
officials at the auto maker lied when they said they used market
data in the pricing proposals they put forward.
According to GM, these allegations don't represent a failure to
negotiate in good faith.
"GM engaged in tense and difficult negotiations" with CCM even
as CCM was "lacking the financial ability" to perform according to
contract obligations, GM's filing said. CCM "cannot morph proposals
made during those negotiations into bad faith offers and a
resulting breach of contract simply because they hoped to receive
higher component part price offers than what GM was willing to
pay."
The next hearing in the litigation is set for Friday before
Judge Christopher Panos of the U.S. Bankruptcy Court in Worcester,
Mass.
Write to Sarah Chaney at sarah.chaney@wsj.com
(END) Dow Jones Newswires
October 11, 2016 15:59 ET (19:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Mar 2024 to Apr 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Apr 2023 to Apr 2024