3. Net Assets in Liquidation

Description

Under the GUC Trust Agreement and the Plan, as described more fully in Note 1, the beneficiaries of the GUC Trust are future and, to the extent their liquidating distributions have not yet been paid to them, current holders of Allowed General Unsecured Claims and future and current holders of GUC Trust Units (“Trust Beneficiaries”). Certain assets of the GUC Trust are set aside for funding the projected costs of liquidation and potential tax liabilities and are currently not available to the Trust Beneficiaries. Other assets of the GUC Trust, primarily Holdings of New GM Securities, as described in Notes 1 and 5, are available to be distributed to the Trust Beneficiaries (“GUC Trust Distributable Assets”) in accordance with the Plan. The amounts of net assets in liquidation presented in the accompanying Condensed Statements of Net Assets in Liquidation (liquidation basis) at September 30, 2013, and March 31, 2013, correspond to the amounts of GUC Trust Distributable Assets as of September 30, 2013, and March 31, 2013.

Trust Units

As described in Note 1, each holder of an Allowed General Unsecured Claim will retain a contingent right to receive, on a pro rata basis, additional shares of New GM Common Stock and New GM Warrants (if and to the extent such shares of New GM Common Stock and New GM Warrants are not required for the satisfaction of previously Disputed General Unsecured Claims or liquidation for the payment of the expenses or tax liabilities of the GUC Trust) and certain cash, if any, remaining at the dissolution of the GUC Trust. The GUC Trust issues units representing such contingent rights (“GUC Trust Units”) at the rate of one GUC Trust Unit per $1,000 of Allowed General Unsecured Claims to each holder of an Allowed General Unsecured Claim, subject to rounding pursuant to the GUC Trust Agreement, in connection with the initial recognition of each Allowed General Unsecured Claim.

The GUC Trust makes quarterly liquidating distributions to holders of GUC Trust Units to the extent that certain previously Disputed General Unsecured Claims asserted against the Debtors’ estates are either disallowed or are otherwise resolved favorably to the GUC Trust (thereby reducing the amount of GUC Trust assets set aside for distribution in respect of such asserted claims) and the amount of Excess GUC Trust Distributable Assets (as defined in the GUC Trust Agreement) as of the end of the relevant quarter exceeds thresholds set forth in the GUC Trust Agreement.

The following presents the changes during the three months ended September 30, 2013, in the numbers of GUC Trust Units outstanding or which the GUC Trust was obligated to issue:


	Trust Units
Outstanding or issuable at June 30, 2013		30,282,801
Issued during the period		55,487
Less: Issuable at beginning of period		(55,487	)
Add: Issuable at end of period		10,575

Outstanding or issuable at September 30, 2013		30,293,376

Allowed and Disputed Claims

The total cumulative pro rata liquidating distributions ultimately received by Trust Beneficiaries are dependent upon the current amount of Allowed General Unsecured Claims and final resolution of outstanding Disputed General Unsecured Claims and potential Term Loan Avoidance Action Claims (as described in Note 2). Disputed General Unsecured Claims at September 30, 2013, reflect claim amounts at their originally filed amounts, a court ordered distribution “set aside” for certain claims filed without a claim amount and other adjustments as ordered by the court or permitted by the Plan. The Disputed General Unsecured Claims may settle at amounts that differ significantly from these amounts and at amounts that differ significantly from the historical pattern at which claims have been settled and allowed in proportion to claims resolved and disallowed. As described in Note 1, prior to the resolution and allowance of Disputed General Unsecured Claims (or potential Term Loan Avoidance Action Claims), liabilities are not recorded for the conditional obligations associated with Disputed General Unsecured Claims. Liquidating distributions payable are recorded (at the fair value of New GM Securities to be distributed) as of the end of the period in which the Disputed General Unsecured Claims are resolved as Allowed General Unsecured Claims. Similarly, to the extent potential Term Loan Avoidance Action Claims were to arise (and would become allowed) in the manner described in Note 2, liquidating distributions payable would be recorded for the New GM Securities (at fair value) that would become distributable to holders of Term Loan Avoidance Action Claims upon such occurrence.

The following table presents a summary of the Allowed and Disputed General Unsecured Claims and potential Term Loan Avoidance Action Claims for the three months ended September 30, 2013:


(in thousands)	Allowed General Unsecured Claims		Disputed General Unsecured Claims			Term Loan Avoidance Action Claims		Maximum Amount of Unresolved Claims (1)			Total Claim Amount (2)
Total, June 30, 2013	$	30,282,730	$	3,404,166		$	1,500,000	$	4,904,166		$	35,186,896
New Allowed General Unsecured Claims		10,575		—			—		—			10,575
Disputed General Unsecured Claims resolved or disallowed		—		(212,773	)		—		(212,773	)		(212,773	)

Total, September 30, 2013	$	30,293,305	$	3,191,393		$	1,500,000	$	4,691,393		$	34,984,698

(1)	Maximum Amount of Unresolved Claims represents the sum of Disputed General Unsecured Claims and Term Loan Avoidance Action Claims.

(2)	Total Claim Amount represents the sum of Allowed General Unsecured Claims and Maximum Amount of Unresolved Claims.

Of the Disputed General Unsecured Claims aggregating $3.19 billion as of September 30, 2013, in the table above, approximately $2.68 billion relates to litigation by the GUC Trust (as defined in Item 2 (“Management’s Discussion and Analysis”) under the heading “Glossary” below, the “Nova Scotia Matter”) to disallow, equitably subordinate or reduce the following claims in the Chapter 11 Cases of the Debtors: (i) claims aggregating $1.073 billion asserted by or on behalf of holders of notes (the “Nova Scotia Notes”) issued in 2003 by General Motors Nova Scotia Finance Company, a Nova Scotia unlimited liability company and then a subsidiary of MLC (“Nova Scotia Finance”), and guaranteed by MLC (collectively, the “Guarantee Claims”), and (ii) the claim of approximately $1.61 billion filed by the bankruptcy trustee for Nova Scotia Finance (the “Wind-Up Claim” and, collectively with the Guarantee Claims, the “Disputed Nova Scotia Claims”). In addition, the GUC Trust has determined that, as of September 30, 2013, approximately $378 million of the aggregate $3.19 billion of Disputed General Unsecured Claims relates to claims filed directly by former beneficial owners of notes previously issued or guaranteed by the Debtors, for which proofs of claim have otherwise been filed indirectly on behalf of such beneficial owners as members of a broader class (the “Duplicative Claims”). Accordingly, of the Disputed General Unsecured Claims aggregating $3.19 billion as of September 30, 2013, only approximately $134 million are associated with matters other than the Nova Scotia Matter and will remain outstanding if and when the Settlement Agreement described below becomes effective.

On September 26, 2013, the GUC Trust entered into a settlement agreement (the “Settlement Agreement”) relating to the Nova Scotia Matter. The Settlement Agreement provides for, among other things, (i) the allowance of a $1.073 billion Allowed General Unsecured Claim in favor of the holders of Nova Scotia Notes in respect of the Guarantee Claims, (ii) the reduction to $477 million and allowance as so reduced of the Wind-Up Claim, and (iii) the disallowance of all of the Duplicative Claims. The Settlement Agreement is subject, among other things, to the receipt of final, non-appealable approvals of its terms by each of the Bankruptcy Court and the Supreme Court of Nova Scotia, a process which is currently ongoing with respect to the Supreme Court of Nova Scotia. As a result, the effects of the Settlement Agreement have not been reflected in the accompanying financial statements and the Guarantee Claims, the Wind-Up Claim and the Duplicative Claims are all still reflected as Disputed General Unsecured Claims in the foregoing table pending the receipt of such approvals. For additional information regarding the Nova Scotia Matter and the related Settlement Agreement, see the disclosure in Item 1 (“Legal Proceedings”) in Part II of this Form 10-Q.