NEW YORK - General Motors (GM) accused the trust set up to handle its bankruptcy claims of secretly plotting with plaintiffs’ attorneys to make it pay $1billion (R13.45bn) in stock as part of a $15million class-action settlement.
The accord, revealed at a hearing on Friday in a federal court in New York, will pit GM against the “Old GM” General Unsecured Creditors Trust for the first time since the 2009 bankruptcy sale created the split to save the company.
The settlement between the plaintiffs and the trust for old GM is due to be signed tomorrow, attorney Steve Berman said.
The deal will resolve hundreds of personal-injury cases stemming from GM’s faulty ignition switches, as well as a class-action suit over millions of vehicles that allegedly lost value due to a series of recalls in 2014, he said.
Under the accord, which requires a judge’s approval, the trust will pay plaintiffs $15m and accept $10bn in previously disputed claims, thus pushing total approved claims in the case beyond a critical threshold of $35bn, Berman said. That would then trigger a provision of the 2009 sale that would force GM to contribute $1bn in stock to help pay the claims, he said.
GM, based in Detroit, is balking. The trust is only accepting the $10bn in claims in order to trigger the provision requiring GM to pay stock, it said. GM has long said the remaining demands are bogus.