In re Motors Liquidation Co.

General Motors (GM) had two separate financing arrangements for which JPMorgan Chase Bank, N.A. (JPMorgan) served as administrative agent: a roughly $300 million synthetic lease secured by real estate, and a separate $1.5 billion term loan secured by a broad range of GM assets. When GM paid off the synthetic lease, a paralegal at the law firm handling the payoff mistakenly included the term loan's primary UCC financing statement among the statements to be terminated. JPMorgan and its counsel approved the resulting closing documents without catching the error, and the term-loan financing statement was terminated by mistake. After GM filed for bankruptcy, JPMorgan discovered the error and argued the termination was ineffective because it never intended to release the term-loan security interest. The Committee of Unsecured Creditors sued for a declaration that the termination was effective, and the bankruptcy court's ruling that it was unauthorized went up on appeal, with the Second Circuit certifying the intent question to the Delaware Supreme Court, which answered that subjective intent is not required.