Bankrupt supplier’s creditors sues GM

Staff report

YOUNGSTOWN

Creditors of an automotive supplier, whose bankruptcy nearly led to the shutdown of North American General Motors assembly plants, have sued the automaker.

Unsecured creditors of Clark-Cutler-McDermott Co. filed the lawsuit Sept. 2 in U.S. Bankruptcy Court in Massachusetts, and said GM’s intent “was to liquidate CCM causing immediate harm to hundreds of employees, trade creditors and eliminating the enterprise value of the business.”

The filing references internal GM emails that directly say the automaker’s intention was to “exit the company.”

The creditors and CCM Automotive Lafayette LLC are suing GM for breach of contract, breach of fiduciary duty, fraud, unfair business practices and other reasons.

“GM believes the claims made by CCM and the committee to be without merit,” a spokesman said in an email statement.

Massachusetts-based CCM, a 105-year-old company, was a GM supplier for more than 50 years.

The company filed for bankruptcy in July, stating that its contracts with GM, its largest customer, were very unprofitable.

The pricing arrangements led the company to lose $30,000 per day, and the company claims that since 2013, contracts have led it to lose more than $12 million.

The company made 175 parts for GM vehicles for plants throughout North America, including the GM Lordstown Assembly Plant where the Chevrolet Cruze is built.

In April, the two entered into an Interim Accommodation Agreement where GM loaned money to CCM.

In June, CCM closed its plants and laid off employees, but GM was able to receive a court order for production to continue.

In July, U.S. Bankruptcy Court District of Massachusetts Judge Christopher J. Panos granted GM the right to recover its tooling from CCM and to purchase its finished-goods inventory for more than $2.9 million.

By the time CCM declared bankruptcy in July, GM loaned more than $6 million to the company.

CCM says in its lawsuit that GM “had no intention of negotiating permanent price increases in good faith, and used the IAA simply as a means to keep CCM afloat just long enough to set itself with alternative suppliers.”