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 at December 31and March 31, 2013, correspond to the amounts of GUC Trust Distributable Assets as of December 31 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 table presents the changes during the three months ended December 31, 2013, in the numbers of GUC Trust Units outstanding or which the GUC Trust was obligated to issue:


	Trust Units
Outstanding or issuable at September 30, 2013		30,293,376
Issued during the period (1)		1,560,575
Less: Issuable at beginning of period (2)		(10,575	)
Add: Issuable at end of period (2)		—

Outstanding at December 31, 2013 (3)		31,843,376

(1)

Of the 1,560,575 GUC Trust Units issued during the quarter ended December 31, 2013, 1,550,000 related to the Nova Scotia Settlement Distribution (as defined below) applicable to the Nova Scotia Matter (as defined below) described in Note 4. The balance was issued in respect of GUC Trust Units issuable at September 30, 2013.

(2)	The number of GUC Trust Units issuable at any time represents GUC Trust Units issuable in respect of Allowed General Unsecured Claims that were newly allowed during the fiscal quarter.

(3)

The number of GUC Trust Units outstanding at any time represents GUC Trust Units issued in respect of Allowed General Unsecured Claims that were allowed in prior periods, including GUC Trust Units held by the GUC Trust for the benefit of (a) holders of Allowed General Unsecured Claims who had not yet supplied information required by the GUC Trust in order to effect the initial distribution to which they are entitled and (b) governmental entities that are precluded by applicable law from receiving distributions of GUC Trust Units and New GM Securities.

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 December 31, 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 December 31, 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, September 30, 2013	$	30,293,305	$	3,191,393		$	1,500,000	$	4,691,393		$	34,984,698
New Allowed General Unsecured Claims		1,550,000		—			—		—			1,550,000
Disputed General Unsecured Claims resolved or disallowed		—		(3,060,821	)		—		(3,060,821	)		(3,060,821	)

Total, December 31, 2013	$	31,843,305	$	130,572		$	1,500,000	$	1,630,572		$	33,473,877

(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.

As previously disclosed, on September 26, 2013, the GUC Trust entered into a settlement agreement (the “Nova Scotia Settlement Agreement”), to resolve certain litigation (the “Nova Scotia Matter”) to disallow, equitably subordinate or reduce claims relating to notes (the “Nova Scotia Notes”) issued in 2003 by General Motors Nova Scotia Finance Company and guaranteed by MLC. The Nova Scotia Settlement Agreement became effective pursuant to its terms on November 25, 2013. As a result, Disputed General Unsecured Claims with an aggregate maximum asserted amount of $3,060.8 million were resolved, $1,550.0 million of which were allowed and approximately $1,510.8 million of which were disallowed. For additional information regarding the Nova Scotia Matter and the Nova Scotia Settlement Agreement, see the disclosure in Item 1 (“Legal Proceedings”) in Part II of this Form 10-Q. See Note 4 for additional information regarding distributions of New GM Securities during the quarter ended December 31, 2013 pursuant to the terms of the Nova Scotia Settlement Agreement.