NEWS2 June 2009

GM owes marketing agencies almost $200m

Legal North America

US— Five marketing service agencies are owed almost $200m between them after financially stricken car and truck manufacturer General Motors (GM) filed for Chapter 11 Bankruptcy Protection yesterday.

The troubled firm owes Starcom Mediavest Story text21.5m, Maritz 5.6m, Publicis Groupe 5.3m, the Interpublic Group of Companies Story text6m and McCann Erickson $4.6m in unpaid ‘trade debts'.

All five agencies, who are on the list of the 50 biggest creditors, offer market research services in one form or another, but the debts are not broken down by practice in documents submitted to court.

Under the terms of Chapter 11 Bankruptcy Protection, a process that allows a company to reorganise itself rather than go into liquidation, the agencies can propose their own reorganisation plan – normally within 120 days – to receive all or some of the money they are owed. After this period, the company in bankruptcy protection can propose its own reorganisation plan, which could leave creditors out of pocket.

GM is one of the largest US companies ever to file for Chapter 11 protection, along with investment bank Lehman Brothers, banking group Washington Mutual and telecoms company Worldcom.