WEBVTT - Bloomberg Law Brief: Ignition Switch Settlement (Audio)

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<v Speaker 1>Well, that was time for our daily Bloomberg Law Brief,

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<v Speaker 1>exploring legal issues in the news, and today Bloomberg Law

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<v Speaker 1>host Doing Grosso and Greg's Store discuss how GM thwarted

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<v Speaker 1>a fifteen million dollar settlement that was intended to resolve

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<v Speaker 1>hundreds of personal injury cases stemming from the carmaker's faulty

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<v Speaker 1>ignition switches. She speaks with Eric Gordon, professor at University

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<v Speaker 1>of Michigan's Ross School of Business. Eric, this is kind

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<v Speaker 1>of complicated stuff, so just start, if you would, by

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<v Speaker 1>explaining exactly what old GM is and what its obligations

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<v Speaker 1>and motivations are. Old GM is a creature of the

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<v Speaker 1>bankruptcy reorganization. In that reorganization, GM is basically split into

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<v Speaker 1>two pieces. Old GM now referred to as the trust,

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<v Speaker 1>and it's a liquidating trust. It's designed to pay off

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<v Speaker 1>the obligations that had to be paid off under the agreement.

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<v Speaker 1>The bankruptcy agreement. New GM, or what you and I

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<v Speaker 1>think of as GM today, got spun off as supposedly

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<v Speaker 1>a clean, new, fresh start entity. That's the purpose of

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<v Speaker 1>bankruptcy re organization UM, so that you know it could

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<v Speaker 1>still make cars and still employ people. Turns out. It

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<v Speaker 1>hasn't been one fresh start. There's some there's some dangling

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<v Speaker 1>kind of threads here. Eric. Last week there was a

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<v Speaker 1>report that old GM, the trust had settled with plaintiffs lawyers.

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<v Speaker 1>What happened Apparently the old GM, the trust and the

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<v Speaker 1>plaintiffs lawyers got together and finally hammered out a deal

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<v Speaker 1>they were happy with. They being those two old GM

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<v Speaker 1>and the plaintiffs lawyers. Apparently New GM was not involved

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<v Speaker 1>in that, wasn't part of the negotiations and found out.

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<v Speaker 1>And so now we have a new agreement that I

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<v Speaker 1>guess maybe supersedes the old old agreement. This is between

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<v Speaker 1>new GM and old GM. Tell us about that. New

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<v Speaker 1>GM said, okay, we'll here, we'll bring something to the table.

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<v Speaker 1>We'll cover some goal fees. And under this new agreement

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<v Speaker 1>between old and new GM, it's time the plaintiff lawyers

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<v Speaker 1>are left out. Um. New GM is going to cover

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<v Speaker 1>some legal fees and apparently all GM is going to

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<v Speaker 1>litigate some defenses that the GM hopes will prevail and

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<v Speaker 1>keep it from having to pay that billion dollars. That's

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<v Speaker 1>Eric Gordon, professor at University of Michigan's Raw School of Business,

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<v Speaker 1>speaking with Bloomberg LA host Jum Grosso and Greg Store.

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<v Speaker 1>You can listen to Bloomberg Law weekdays at one pm

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<v Speaker 1>Wall Street Time here on Bloomberg Radio, and that is

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<v Speaker 1>this morning's Bloomberg Law Braef. You can find more legal

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