General Motors Retirees Sue Over Benefit Losses After Bankruptcy

May 11 (Bloomberg) -- Dozens of General Motors Co. executive retirees sued the company contending they suffered loss of benefits after the automaker’s bankruptcy.

The pensioners, including former GM Vice President John G. Middlebrook, are asking a judge to rule the company violated the federal Employee Retirement Income Security Act and order it to pay past-due benefits with interest, plus legal fees and expenses.

“In erroneously administering” the retirement plan, GM “contravenes the plain text” of the contract, lawyers for the executives said May 9 in a complaint filed in federal court in Detroit. Denial of benefits “constitutes an abuse of the discretion provided” in the plan, and is “arbitrary and capricious,” the lawyers said.

Detroit-based GM filed the third-largest bankruptcy in history in June 2009. The U.S. Treasury provided billions of dollars in loans that converted into equity.

“Sacrifices were made by every stakeholder, including former executives, to create a foundation upon which the new GM can thrive,” James Cain, a spokesman for General Motors, said in a telephone interview. He said the pension plan administrator “properly considered and denied” the claims.

The case is Tate v. General Motors LLC, 2:11-cv-12028, U.S. District Court, Eastern District of Michigan (Detroit).

--Editors: Stephen Farr, Charles Carter

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.