GM Says Bankruptcy Trust Plotted to Take $1 Billion in Stock

General Motors Co. claims the trust set up to handle its bankruptcy in 2009 conspired with plaintiffs’ attorneys to include a $1 billion stock payment as part of a pending $15 million class-action settlement of claims against “old” GM.

GM was split during its 2009 bankruptcy restructuring into old GM, which retained debt claims and various other liabilities of the original company. “New” GM, which emerged from the process, was to be free of those burdens. General Unsecured Creditors Trust was set up to handle claims against old GM.

Old GM is prepared next Tuesday to finalize a deal in a U.S. District Court in Manhattan under which the trust will pay $15 million to resolve hundreds of personal injury cases linked to the company’s faulty ignition switches. The agreement also covers hundreds of additional economic claims of lost value by owners whose vehicles were among 27 million GM recalled in 2014 to repair dozens of flaws.

But the agreement further requires the trust to accept $10 billion in disputed claims. Bloomberg says doing so would push the total claims to be paid above $35 billion. That would trigger a provision in the 2009 bankruptcy that requies new GM to contribute $1 billion in stock to help pay the claims.

GM asserts that the trust is accepting too many questionable claims specifically to trigger the stock contribution. The plaintiffs’ attorneys say they have ample evidence that the claims are legitimate.

Last month GM lost a legal bid to avoid exposure to some of the ignition switch and economic claims that pre-dated the bankruptcy.