Cadence sues GM for $4.91 million owed under accommodation agreement

By Caroline Salls

Pittsburgh, Feb. 12 - Cadence Innovation LLC filed a lawsuit Thursday against General Motors Corp. that asks the U.S. Bankruptcy Court for the District of Delaware to force GM to comply with a court-approved accommodation agreement and turn over more than $4.91 million in related funds.

According to the complaint filed Thursday, Cadence relies on the funds GM allegedly owes under the accommodation agreement to confirm a plan in its bankruptcy case.

Under the accommodation agreement, GM agreed to make payments on Cadence's post-bankruptcy accounts receivable, not set off any of its accounts payable to Cadence for shipments of component parts and tooling and purchase all raw materials, components and finished goods from Cadence that are related to the component parts.

Cadence said GM also agreed to pay for incremental costs incurred by Cadence in manufacturing an inventory bank, and the agreement gave GM the exclusive option to purchase any Cadence-owned tooling and equipment used to manufacture parts for GM.

However, Cadence alleged that GM wanted to take the equipment without paying the agreed-upon price. When Cadence refused to hand over the equipment, GM filed a lawsuit against Cadence.

Although the parties reached a settlement of the tooling disputes, Cadence said GM still has not paid for equipment and other inventory as required under the accommodation agreement and settlement.

As a result, Cadence is seeking $4.91 million from GM and is asking the court to enforce the terms of the accommodation agreement and dispute settlement.

Cadence, a Troy, Mich.-based auto parts supplier, filed for bankruptcy on Aug. 26. Its Chapter 11 case number is 08-11973.

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