By Erik Larson, Bloomberg News
General Motors Co. was accused of secretly plotting to derail a $15 million settlement between the company’s bankruptcy trust and thousands of plaintiffs that would have forced it to contribute $1 billion in stock.
In a letter filed Thursday in U.S. Bankruptcy Court in Manhattan, lawyers for the plaintiffs said GM conspired with the trust to block the accord after previously accusing the trust and the plaintiffs of similar behavior in reaching the deal last week.
GM “undertook a secret, contrived scheme to undermine the settlement agreement through a campaign of threats, intimidation and payoffs,” plaintiffs attorney Edward Weisfelner said in the letter, which was dated Wednesday. “At a minimum, it is the pot calling the kettle black.”
GM spokesman Jim Cain said “we are pleased” that the company reached its own deal with the trust to continue fighting the cases in court.
“Now the focus can return to where it belongs, which is the merits of the plaintiffs’ remaining claims,” he said in an email. “We will demonstrate that those claims lack merit.”
Detroit-based GM had fumed at the settlement and promised a court fight over what it called a “contrived scheme.” The company has been fighting to move on from the litigation after previously paying at least $870 million to settle claims and an additional $900 million to the Department of Justice to resolve a criminal probe.
The settlement between the plaintiffs and the trust for “Old GM” was due to be signed Aug. 15 and discussed at a hearing in bankruptcy court Thursday. The deal was intended to 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.
Under that deal, the trust would have paid plaintiffs $15 million and accepted $10 billion in previously disputed claims, which would have pushed total approved claims in the case beyond a critical threshold of $35 billion. That would have triggered a provision of the 2009 bankruptcy sale that would have forced GM to contribute $1 billion in stock to help pay the claims.
The case is In Re: General Motors Ignition Switch Litigation, 14-MD-2543, U.S. District Court, Southern District of New York (Manhattan).