Well, that was time for our daily Bloomberg Law Brief, exploring legal issues in the news, and today Bloomberg Law host Doing Grosso and Greg's Store discuss how GM thwarted a fifteen million dollar settlement that was intended to resolve hundreds of personal injury cases stemming from the carmaker's faulty ignition switches. She speaks with Eric Gordon, professor at University
of Michigan's Ross School of Business. Eric, this is kind of complicated stuff, so just start, if you would, by explaining exactly what old GM is and what its obligations and motivations are. Old GM is a creature of the bankruptcy reorganization. In that reorganization, GM is basically split into two pieces. Old GM now referred to as the trust, and it's a liquidating trust. It's designed to pay off the obligations that had to be paid off under the agreement.
The bankruptcy agreement. New GM, or what you and I think of as GM today, got spun off as supposedly a clean, new, fresh start entity. That's the purpose of bankruptcy re organization UM, so that you know it could still make cars and still employ people. Turns out. It hasn't been one fresh start. There's some there's some dangling kind of threads here. Eric. Last week there was a report that old GM, the trust had settled with plaintiffs lawyers.
What happened Apparently the old GM, the trust and the plaintiffs lawyers got together and finally hammered out a deal they were happy with. They being those two old GM and the plaintiffs lawyers. Apparently New GM was not involved in that, wasn't part of the negotiations and found out. And so now we have a new agreement that I guess maybe supersedes the old old agreement. This is between new GM and old GM. Tell us about that. New GM said, okay, we'll here, we'll bring something to the table.
We'll cover some goal fees. And under this new agreement between old and new GM, it's time the plaintiff lawyers are left out. Um. New GM is going to cover some legal fees and apparently all GM is going to litigate some defenses that the GM hopes will prevail and keep it from having to pay that billion dollars. That's Eric Gordon, professor at University of Michigan's Raw School of Business, speaking with Bloomberg LA host Jum Grosso and Greg Store.
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