Courtesy of the $83 billion auto bailout – on which we are already poised to lose more than $40 billion – the taxpayers are stuck with 26% stock ownership of General Motors (GM).  It could get much worse.

Judge Set to Rule on Case That Could Reverse Auto Bailout

A New York federal judge may rule imminently on a case that could reverse the General Motors bailout and send the company back into bankruptcy….

At issue is a backroom deal hatched by GM to fulfill the Obama administration’s demand for a quick bankruptcy, draining the automaker of nearly all of its cash on hand and leaving it in worse shape than it was when it collapsed in 2009….

On the eve of entering bankruptcy, the company cut a $367 million “lock-up agreement” with several major hedge funds to prevent GM Canada from failing. The agreement ensured that GM could spin-off its liabilities to “old GM,” while using a multi-billion dollar bailout to create a new company….

“(Judge Robert Gerber) has made it very clear that he is greatly dissatisfied with the process,” one analyst told the Washington Free Beacon in October. “He’s basically implying that GM hid it from him and that reopening the sale is a possibility.”…

“In this particular situation, there’s $1.3 billion in liabilities, but that’s just what’s officially back on the table if the court rules for old GM,” said a bankruptcy expert close to the negotiations. “If those go back on the table then everything could be back on the table and [new GM] would have to address them.”

Those liabilities, which include old GM’s debt and product liabilities that pre-date bankruptcy, are valued at $30 billion, a sum that would wipe out the company’s $34.6 billion cash reserves.

We may be on the verge of adding another $31.3 billion – at least – to the auto bailout loss tally, pushing the total to over $70 billion. The reversal would cause GM’s stock to plummet even further.  And again, we own 26% of the mess – meaning we’d lose even more coin.

And then there are the other, similar lawsuits.

Spyker Sues GM for $3 Billion Over Saab Bankruptcy 

Spyker claims that GM purposely sent Saab into bankruptcy by blocking a deal with a Chinese car manufacturer.

More lawsuits will follow should the entire bankruptcy be undone.  How many millions or billions in GM legal fees and potential damages will this cost?

“(I)f all the liabilities come back to roost, short that stock,” the bankruptcy expert said.

The taxpayers wish we could.