1 00:00:00,080 --> 00:00:02,960 Speaker 1: General Motors is accusing the trust set up to handle 2 00:00:02,960 --> 00:00:07,040 Speaker 1: its bankruptcy claims of secretly plotting with plaintiff's attorneys to 3 00:00:07,120 --> 00:00:09,800 Speaker 1: make it pay one billion dollars in stock as part 4 00:00:09,840 --> 00:00:13,240 Speaker 1: of a class action settlement. Under the settlement, the bankruptcy 5 00:00:13,280 --> 00:00:16,799 Speaker 1: trust for the old GM will pay plaintiffs fifteen million 6 00:00:16,840 --> 00:00:21,560 Speaker 1: dollars and accept ten billion dollars in previously disputed claims 7 00:00:21,640 --> 00:00:24,400 Speaker 1: that pushed the total approved claims in the case beyond 8 00:00:24,440 --> 00:00:28,360 Speaker 1: a threshold of thirty five billion, which is critical. Plaintiffs 9 00:00:28,360 --> 00:00:32,120 Speaker 1: attorney Steve Berman said that threshold triggers a provision in 10 00:00:32,159 --> 00:00:36,199 Speaker 1: the two thousand nine bankruptcy sale created to save GM 11 00:00:36,240 --> 00:00:39,800 Speaker 1: that would force GM to contribute one billion dollars in 12 00:00:39,920 --> 00:00:43,280 Speaker 1: stock to help pay the claims. Bloomberg News legal reporter 13 00:00:43,479 --> 00:00:47,720 Speaker 1: Eric Larson has been following this case and joins us. Now. Eric, 14 00:00:47,800 --> 00:00:51,519 Speaker 1: We've been hearing about these GM ignitions, which cases, and 15 00:00:51,560 --> 00:00:57,680 Speaker 1: the trials and the settlements for years. So describe this settlement. Well, 16 00:00:57,680 --> 00:01:02,040 Speaker 1: this settlement is a little bit different because, UH, it 17 00:01:02,120 --> 00:01:05,960 Speaker 1: requires GM to potentially put in a billion dollars in 18 00:01:06,600 --> 00:01:09,640 Speaker 1: stock that the company itself, the new GM, had no 19 00:01:10,000 --> 00:01:13,440 Speaker 1: part in. UH, no part in arranging the settlement, So 20 00:01:13,520 --> 00:01:16,480 Speaker 1: they're going to challenge it saying that this these ten 21 00:01:16,520 --> 00:01:19,200 Speaker 1: billion dollars and claims that the Trust wants to recognize 22 00:01:19,560 --> 00:01:21,920 Speaker 1: our bogus claims they would never hold up in court. 23 00:01:22,520 --> 00:01:26,000 Speaker 1: I and they claim that the Trust is merely accepting 24 00:01:26,040 --> 00:01:29,319 Speaker 1: them just to trigger that that threshold number and force 25 00:01:29,440 --> 00:01:31,480 Speaker 1: this one billion dollars in stock to go in and 26 00:01:31,800 --> 00:01:36,520 Speaker 1: basically make the settlement more palatable for the plaintiffs. Eric, 27 00:01:36,840 --> 00:01:40,720 Speaker 1: what do we know about what standard will judge this question? 28 00:01:40,880 --> 00:01:44,720 Speaker 1: What is either what does the New General Motors have 29 00:01:44,959 --> 00:01:48,240 Speaker 1: to show uh to to avoid having to put in 30 00:01:48,280 --> 00:01:51,400 Speaker 1: this billion dollars in stock. Well, that's a really good question, 31 00:01:51,400 --> 00:01:53,720 Speaker 1: and it's it's pretty unclear at this point. This is 32 00:01:53,760 --> 00:01:56,920 Speaker 1: a pretty early early days for this dispute, which I 33 00:01:56,960 --> 00:01:59,680 Speaker 1: think is going to get a little bit heated in court. Uh. 34 00:01:59,760 --> 00:02:01,840 Speaker 1: This the first time that old GM and New GM 35 00:02:01,960 --> 00:02:05,640 Speaker 1: are sort of fighting like this, and it's it's a 36 00:02:05,640 --> 00:02:08,720 Speaker 1: little bit unusual, and neither side really has laid out 37 00:02:08,760 --> 00:02:12,360 Speaker 1: exactly what their legal arguments are. It was just referenced 38 00:02:12,400 --> 00:02:15,600 Speaker 1: in court that this settlement had been reached and there 39 00:02:15,600 --> 00:02:17,600 Speaker 1: were not a lot of details given other than what 40 00:02:17,600 --> 00:02:20,200 Speaker 1: we've already discussed and the settlement is due to be 41 00:02:20,280 --> 00:02:23,320 Speaker 1: signed tomorrow, so we should get more details. But I 42 00:02:23,800 --> 00:02:26,920 Speaker 1: know that new GM is saying that this deal was 43 00:02:26,960 --> 00:02:30,600 Speaker 1: reached secretly. Uh. They seem to think that they should 44 00:02:30,639 --> 00:02:33,000 Speaker 1: have been involved somehow, and that this was basically they 45 00:02:33,080 --> 00:02:35,799 Speaker 1: used the word plotted, uh, you know, behind their backs. 46 00:02:35,840 --> 00:02:40,639 Speaker 1: So whereas the plaintiffs attorney says that this is exactly 47 00:02:40,680 --> 00:02:43,840 Speaker 1: what GM bargained for when it put this provision in 48 00:02:43,880 --> 00:02:46,840 Speaker 1: the two thousand nine bankruptcy bankruptcy sale in the first place, 49 00:02:47,280 --> 00:02:49,240 Speaker 1: So there was always going to be that risk at 50 00:02:49,280 --> 00:02:52,400 Speaker 1: thirty five billion dollars in claims could be reached or 51 00:02:52,440 --> 00:02:55,160 Speaker 1: exceeded and trigger this, And they say they're just going 52 00:02:55,160 --> 00:02:58,280 Speaker 1: by the books. So Eric GM also called it a 53 00:02:58,400 --> 00:03:02,639 Speaker 1: contrived scheme. But how do they reach this point where 54 00:03:02,680 --> 00:03:07,600 Speaker 1: they're about to sign a settlement, according to the plantiffs attorney, 55 00:03:07,680 --> 00:03:11,359 Speaker 1: and they're just realizing this now, why didn't this come 56 00:03:11,440 --> 00:03:15,600 Speaker 1: up earlier? Well? I think that that's another good question. 57 00:03:15,680 --> 00:03:18,240 Speaker 1: I think the judge will probably be asking that question 58 00:03:18,320 --> 00:03:23,440 Speaker 1: as well. Um, it's notably the trust and the plaintiffs 59 00:03:23,840 --> 00:03:26,240 Speaker 1: they are going to argue. They said they'll argue that 60 00:03:26,320 --> 00:03:30,120 Speaker 1: they don't think new GM actually has any right to 61 00:03:30,200 --> 00:03:33,040 Speaker 1: object here. They say that the language and the sale 62 00:03:33,120 --> 00:03:35,320 Speaker 1: in this provision that we discussed about the thirty five 63 00:03:35,360 --> 00:03:38,120 Speaker 1: billion dollar marks, that that language is very clear, and 64 00:03:38,160 --> 00:03:42,320 Speaker 1: that the trust is the only entity that is has 65 00:03:42,360 --> 00:03:45,280 Speaker 1: the authority to you know, deal with these claims and 66 00:03:45,280 --> 00:03:47,920 Speaker 1: approve or deny them. So um, I think they're going 67 00:03:47,960 --> 00:03:50,280 Speaker 1: to argue that they're just going by what is in 68 00:03:50,320 --> 00:03:53,320 Speaker 1: the sale agreements and that GM is just sort of 69 00:03:53,360 --> 00:03:56,240 Speaker 1: out of luck. But it's a good question why this 70 00:03:56,280 --> 00:03:58,720 Speaker 1: is just coming up now, just you know, a few 71 00:03:58,800 --> 00:04:01,600 Speaker 1: days before the settlement is supposed to be signed. But 72 00:04:02,280 --> 00:04:05,600 Speaker 1: of course even after it's signed, judge still has to 73 00:04:05,600 --> 00:04:09,240 Speaker 1: approve it. So um, there they'll be making all these 74 00:04:09,320 --> 00:04:12,280 Speaker 1: arguments in court, I would imagine very soon. Eric. When 75 00:04:12,360 --> 00:04:15,920 Speaker 1: you talk about these ten billion dollars and previously disputed claims, 76 00:04:16,520 --> 00:04:19,039 Speaker 1: what are those? What's the biggest category are we talking about, 77 00:04:19,320 --> 00:04:23,640 Speaker 1: like the claims that that the defect lowered car resale 78 00:04:23,680 --> 00:04:28,719 Speaker 1: values or something else? Right, So these are four hundreds 79 00:04:28,760 --> 00:04:32,920 Speaker 1: to five hundred personal injury claims. They're not all just 80 00:04:33,000 --> 00:04:37,160 Speaker 1: related to the ignition switch issue, um, but just personal 81 00:04:37,160 --> 00:04:40,520 Speaker 1: injury claims from before the bankruptcy, but also UM a 82 00:04:40,520 --> 00:04:44,440 Speaker 1: class action suit that has eleven point nine million class 83 00:04:44,480 --> 00:04:47,679 Speaker 1: members UM, and those are related to the so called 84 00:04:47,720 --> 00:04:51,680 Speaker 1: economic losses UH that these vehicles suffered as a result 85 00:04:51,720 --> 00:04:54,719 Speaker 1: of the ignition switch recall and also other recalls, a 86 00:04:54,800 --> 00:04:59,800 Speaker 1: series of recalls in two thousand fourteen. Uh. So there's it. 87 00:05:00,120 --> 00:05:04,240 Speaker 1: Quite a big settlement, UM and UH it covers a 88 00:05:04,279 --> 00:05:08,000 Speaker 1: wide array of different types of lawsuits that GM frankly 89 00:05:08,040 --> 00:05:10,160 Speaker 1: thought they'd put behind them when they signed that two 90 00:05:10,200 --> 00:05:14,640 Speaker 1: thousand nine bankruptcy. About thirty seconds here, Eric, who is 91 00:05:14,680 --> 00:05:17,600 Speaker 1: going to have to sign this settlement? Is New GM 92 00:05:17,640 --> 00:05:20,400 Speaker 1: going to have to sign the settlement? No, this is 93 00:05:20,400 --> 00:05:23,520 Speaker 1: a settlement between only the trust that was set up 94 00:05:23,760 --> 00:05:26,919 Speaker 1: for the general unsecured creditors of the so called old 95 00:05:26,960 --> 00:05:30,520 Speaker 1: GM that was when the company was basically split as 96 00:05:30,560 --> 00:05:34,800 Speaker 1: part of that bankruptcy sale. UH. And this plaintiffs group 97 00:05:34,960 --> 00:05:38,640 Speaker 1: with the plaintiffs attorney Steve Berman. UM. That's those are 98 00:05:38,640 --> 00:05:40,800 Speaker 1: the only two signs. And of course GM New GM 99 00:05:40,839 --> 00:05:43,000 Speaker 1: will be objecting to it and trying to stop it. 100 00:05:43,440 --> 00:05:46,440 Speaker 1: You really need a diagram to figure this one out. 101 00:05:46,560 --> 00:05:49,479 Speaker 1: Thanks so much for helping us with that. That's Bloomberg 102 00:05:49,520 --> 00:05:53,000 Speaker 1: News legal reporter Eric Larson, who has written about this case.