Hedge Funds Seek Court Mediation of “Old GM” Dispute

Hedge fund firm Paulson & Co. has asked the federal judge who oversaw the bankruptcy of General Motors Co. to appoint another judge to mediate a settlement of its dispute with the trust that administers the assets GM cast off in bankruptcy.

Motors Liquidation Co. GUC Trust sued Paulson and three other hedge funds early last year, alleging that their $2.7 billion claim against "Old GM" is more than three times what they are owed. The funds, which held notes issued by a Nova Scotia unit of GM, reached an advantageous settlement with the unit only hours before the automaker filed for bankruptcy in June 2009.

The trust is seeking to have the hedge funds' claims dismissed or reduced. GM has said that a decision in favor of the funds could cost it as much as $918 million.