GM Reportedly Faces Renewed Prospect Of $1 Bln Payout Over Ignition Safety
General Motors Co. (GM) again faces the prospect of a potential $1 billion stock payout to address claims stemming from the auto giant’s ignition-switch crisis after a trust for the company’s bankruptcy estate renewed discussions with plaintiffs about a settlement, the Wall Street Journal reported.
The trust, tasked with compensating creditors of the “old GM,” is discussing a possible deal that previously fell apart, lawyers reportedly said during a Thursday hearing in a Manhattan federal bankruptcy court. Old GM is the term often used to describe the assets GM left behind in 2009 as part of its $50 billion government rescue and bankruptcy restructuring.
A deal, which isn’t guaranteed, could have GM paying the trust $1 billion in stock to address claims from accident victims and customers seeking recompense for declining vehicle values arising from faulty ignition switches.
GM in 2014 recalled roughly 2.6 million older cars with ignition switches that risked slipping from the run position, leading to stalled engines and disabled air bags in crashes. GM settled a criminal case and paid billions of dollars in settlements and penalties for mishandling the defect, now linked to 124 deaths.
U.S. Bankruptcy Judge Martin Glenn earlier this year ruled the first trust settlement couldn’t be enforced because it lacked necessary signatures. But he chided the trust’s lawyers for “last-minute infidelity” and “pulling the rug out from” plaintiffs’ lawyers to strike a different deal with GM even though the original agreement was essentially completed. The second deal with GM would have avoided the $1 billion payout.
by RTT Staff Writer
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