Motors Liquidation Company f/k/a General Motors Corporation (Old GM) filed for bankruptcy protection on June 1, 2009.  In the months leading up to that filing, hedge funds that specialize in distressed debt snapped up the unsecured debt of Old GM and its subsidiaries, including more than $1 billion of unsecured bonds (Notes) of General Motors Nova Scotia Finance Company (NS Finance).  Old GM had guaranteed repayment of the Notes.  As part of Old GM’s Chapter 11 reorganization, Motors Liquidation Company GUC Trust (GUC Trust) was established to handle disputed claims of unsecured creditors, including those of the Noteholders.  In a Southern District of New York adversary proceeding, GUC Trust claims that, in the days just prior to Old GM’s bankruptcy filing, certain of the Noteholders extracted a settlement from NS Finance that was an “egregious economic overreach.”  This article summarizes the transactions that led to the GUC Trust complaint and its specific allegations.  See also “GM Bankruptcy Judge Rejects Distressed Debt Hedge Fund Investors’ Objections to Reorganization Plan,” Hedge Fund Law Report, Vol. 4, No. 11 (Apr. 1, 2011).