General Motors is accusing the trust set up to handle its bankruptcy claims of secretly plotting with plaintiff's attorneys to make it pay one billion dollars in stock as part of a class action settlement. Under the settlement, the bankruptcy trust for the old GM will pay plaintiffs fifteen million dollars and accept ten billion dollars in previously disputed claims that pushed the total approved claims in the case beyond
a threshold of thirty five billion, which is critical. Plaintiffs attorney Steve Berman said that threshold triggers a provision in the two thousand nine bankruptcy sale created to save GM that would force GM to contribute one billion dollars in stock to help pay the claims. Bloomberg News legal reporter Eric Larson has been following this case and joins us. Now. Eric, We've been hearing about these GM ignitions, which cases, and
the trials and the settlements for years. So describe this settlement. Well, this settlement is a little bit different because, UH, it requires GM to potentially put in a billion dollars in stock that the company itself, the new GM, had no part in. UH, no part in arranging the settlement, So they're going to challenge it saying that this these ten billion dollars and claims that the Trust wants to recognize our bogus claims they would never hold up in court.
I and they claim that the Trust is merely accepting them just to trigger that that threshold number and force this one billion dollars in stock to go in and basically make the settlement more palatable for the plaintiffs. Eric, what do we know about what standard will judge this question? What is either what does the New General Motors have to show uh to to avoid having to put in this billion dollars in stock. Well, that's a really good question,
and it's it's pretty unclear at this point. This is a pretty early early days for this dispute, which I think is going to get a little bit heated in court. Uh. This the first time that old GM and New GM are sort of fighting like this, and it's it's a little bit unusual, and neither side really has laid out
exactly what their legal arguments are. It was just referenced in court that this settlement had been reached and there were not a lot of details given other than what we've already discussed and the settlement is due to be signed tomorrow, so we should get more details. But I know that new GM is saying that this deal was reached secretly. Uh. They seem to think that they should have been involved somehow, and that this was basically they used the word plotted, uh, you know, behind their backs.
So whereas the plaintiffs attorney says that this is exactly what GM bargained for when it put this provision in the two thousand nine bankruptcy bankruptcy sale in the first place, So there was always going to be that risk at thirty five billion dollars in claims could be reached or exceeded and trigger this, And they say they're just going by the books. So Eric GM also called it a
contrived scheme. But how do they reach this point where they're about to sign a settlement, according to the plantiffs attorney, and they're just realizing this now, why didn't this come up earlier? Well? I think that that's another good question. I think the judge will probably be asking that question as well. Um, it's notably the trust and the plaintiffs they are going to argue. They said they'll argue that they don't think new GM actually has any right to
object here. They say that the language and the sale in this provision that we discussed about the thirty five billion dollar marks, that that language is very clear, and that the trust is the only entity that is has the authority to you know, deal with these claims and approve or deny them. So um, I think they're going to argue that they're just going by what is in the sale agreements and that GM is just sort of
out of luck. But it's a good question why this is just coming up now, just you know, a few days before the settlement is supposed to be signed. But of course even after it's signed, judge still has to approve it. So um, there they'll be making all these arguments in court, I would imagine very soon. Eric. When you talk about these ten billion dollars and previously disputed claims,
what are those? What's the biggest category are we talking about, like the claims that that the defect lowered car resale values or something else? Right, So these are four hundreds
to five hundred personal injury claims. They're not all just related to the ignition switch issue, um, but just personal injury claims from before the bankruptcy, but also UM a class action suit that has eleven point nine million class members UM, and those are related to the so called economic losses UH that these vehicles suffered as a result of the ignition switch recall and also other recalls, a series of recalls in two thousand fourteen. Uh. So there's it.
Quite a big settlement, UM and UH it covers a wide array of different types of lawsuits that GM frankly thought they'd put behind them when they signed that two thousand nine bankruptcy. About thirty seconds here, Eric, who is going to have to sign this settlement? Is New GM going to have to sign the settlement? No, this is a settlement between only the trust that was set up for the general unsecured creditors of the so called old GM that was when the company was basically split as
part of that bankruptcy sale. UH. And this plaintiffs group with the plaintiffs attorney Steve Berman. UM. That's those are the only two signs. And of course GM New GM will be objecting to it and trying to stop it. You really need a diagram to figure this one out. Thanks so much for helping us with that. That's Bloomberg News legal reporter Eric Larson, who has written about this case.