GM Asks Judge to Toss Bankrupt Supplier's Lawsuit

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 [e-mail]

(END) Dow Jones Newswires

October 11, 2016 15:59 ET (19:59 GMT)

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