Montgomery (Ala.) City Employees' Retirement System is the lead plaintiff in a class-action suit against J.P. Morgan Chase and the law firm of Simpson Thacher and Bartlett over the loss of interest in a loan to General Motors Corp. prior to its Chapter 11 bankruptcy in 2009.
The lawsuit was filed July 30 in U.S. District Court for the Southern District of New York.
The $347 million pension fund held an interest in the $1.5 billion term loan to GM, according to court documents. It claims J.P. Morgan Chase, as agent for the loan, and Simpson Thacher, the bank's lawyer, failed to spot an error in the recording of the security interest in the loan by J.P. Morgan's previous law firm, Mayer Brown, that led to the interest not being paid.
The suit claims gross negligence on the part of J.P. Morgan and Simpson Thacher, according to the court documents.
Michael Fusco, J.P. Morgan Chase spokesman, and Amanda Smith, spokeswoman at Simpson Thacher, said their firms had no comment on the lawsuit.
Separately, the Montgomery City system and the $468 million Oakland (Calif.) Police and Fire Retirement System filed separate lawsuits July 31 against the law firm of Mayer Brown for its role in the error. A Mayer Brown spokesman declined to comment.
Crain’s Chicago Business, a sister publication to Pensions & Investments, contributed to this story.