Trust Cancels GM Ignition Switch Settlement

A trust that holds many of General Motors Co.’s pre-bankruptcy liabilities has canceled a pending agreement to settle millions of claims about GM’s faulty ignition switches and other  defects, Reuters reports.

The trust says it scrapped the deal after GM agree to help pay for its defense against remaining plaintiffs’ claims.

Claims initially centered on deaths and injuries linked to GM’s recall in 2014 of 2.6 million defective ignition switches. The pool has since expanded dramatically to cover dozens of other recalls GM launched in 2014, plus lost resale value for the vehicles involved.

Details of the planned settlement emerged from a court hearing last week. The deal would have required the trust to accept $10 billion in claims, thereby triggering a stipulation that “new” GM would be required to turn over $1 billion in stock to the trust.

GM opposed the agreement, claiming the trust and plaintiffs’ lawyers schemed to boost the total value of the claims enough to invoke the stock contribution.

Lawyers for millions of plaintiffs describe the last-minute decision to scrap the deal as “astonishing and improper.” GM says the move will enable the case to “return to where it belongs, which is the merits of the plaintiffs’ remaining claims,” adding that it believes those claims have no merit.