News & Reports News Year 2010 December , 2010 Automakers Toyota sues old GM over deal breach

Automakers Toyota sues old GM over deal breach

Japanese automaker Toyota Motor says it means to sue General Motors's bankruptcy estate over losses stemming from the closure of their joint manufacturing plant in California.

Toyota spokesman Paul Nolasco on Wednesday claimed GM's Motors Liquidation Company (MLC) should pay USD 73 million for breach of contract over closing the New United Motor Manufacturing Inc. (NUMMI) plant earlier this year.

GM abandoned the venture in 2009 as it was bailed out and restructured by the US government. Toyota closed the plant in April after an agreement with its 4,500 unionized workers.

"We've been discussing how to pay costs of winding down NUMMI for more than a year, but as the US court recommended us to file a lawsuit, we filed the suit on November 24," said Nolasco.

Toyota sold the plant to Tesla Motors in May while buying a 50 million dollar stake in the US electric vehicle maker.

Meanwhile, NUMMI has filed a separate suit against MLC -- also known as old GM -- and demanded some 360 million dollars for damages caused by the dissolution of the joint venture.

MLC, responsible for the discarded assets of the former auto giant, chose "to end its active participation in NUMMI," which "breached commitments to NUMMI and sounded its death knell," said the lawsuit filed last week.

And unlike Toyota, GM's bankruptcy estate "has refused to contribute to NUMMI's deficit during the wind down," it added.

Having lost its world's top automaker position to Toyota in 2008, GM had to receive a 50-billion-dollar bailout in mid-2009 amid soaring debt and plunging sales which forced the embattled company into state-backed bankruptcy protection.

General Motor launched a massive USD 23 billion share offering earlier this month, which lowered the government stake in the company below 50 percent and recovered USD 11.7 billion for US taxpayers.