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General Motors thwarts plaintiffs’ $1 billion accord with old GM trust

By Erik Larson, Bloomberg
Published: August 17, 2017, 8:41pm

General Motors thwarted a $15 million settlement between the company’s bankruptcy trust and thousands of plaintiffs that would have forced the automaker to contribute $1 billion in stock, prompting claims of a secret plot cooked up behind closed doors.

The now-derailed 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. In a letter filed Thursday in U.S. Bankruptcy Court, lawyers for the plaintiffs said GM conspired with the trust to block the accord after GM previously accused the trust and the plaintiffs of engaging in the same behavior in negotiations 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.”

Detroit-based GM had fumed at the settlement and promised a court fight over what it called a “contrived scheme” to extract the $1 billion in stock. 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.

GM spokesman Jim Cain said “we are pleased” that the company can continue fighting what it calls bogus personal injury claims in court instead of settling.

The General Unsecured Creditors Trust said it reached a separate agreement with GM where the auto maker will pay the trust an unspecified sum to cover legal expenses, according to a letter Wednesday.

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