Speaker 1: General Motors is accusing the trust set up to handle
Speaker 1: its bankruptcy claims of secretly plotting with plaintiff's attorneys to
Speaker 1: make it pay one billion dollars in stock as part
Speaker 1: of a class action settlement. Under the settlement, the bankruptcy
Speaker 1: trust for the old GM will pay plaintiffs fifteen million
Speaker 1: dollars and accept ten billion dollars in previously disputed claims
Speaker 1: that pushed the total approved claims in the case beyond
Speaker 1: a threshold of thirty five billion, which is critical. Plaintiffs
Speaker 1: attorney Steve Berman said that threshold triggers a provision in
Speaker 1: the two thousand nine bankruptcy sale created to save GM
Speaker 1: that would force GM to contribute one billion dollars in
Speaker 1: stock to help pay the claims. Bloomberg News legal reporter
Speaker 1: Eric Larson has been following this case and joins us. Now. Eric,
Speaker 1: We've been hearing about these GM ignitions, which cases, and
Speaker 1: the trials and the settlements for years. So describe this settlement. Well,
Speaker 1: this settlement is a little bit different because, UH, it
Speaker 1: requires GM to potentially put in a billion dollars in
Speaker 1: stock that the company itself, the new GM, had no
Speaker 1: part in. UH, no part in arranging the settlement, So
Speaker 1: they're going to challenge it saying that this these ten
Speaker 1: billion dollars and claims that the Trust wants to recognize
Speaker 1: our bogus claims they would never hold up in court.
Speaker 1: I and they claim that the Trust is merely accepting
Speaker 1: them just to trigger that that threshold number and force
Speaker 1: this one billion dollars in stock to go in and
Speaker 1: basically make the settlement more palatable for the plaintiffs. Eric,
Speaker 1: what do we know about what standard will judge this question?
Speaker 1: What is either what does the New General Motors have
Speaker 1: to show uh to to avoid having to put in
Speaker 1: this billion dollars in stock. Well, that's a really good question,
Speaker 1: and it's it's pretty unclear at this point. This is
Speaker 1: a pretty early early days for this dispute, which I
Speaker 1: think is going to get a little bit heated in court. Uh.
Speaker 1: This the first time that old GM and New GM
Speaker 1: are sort of fighting like this, and it's it's a
Speaker 1: little bit unusual, and neither side really has laid out
Speaker 1: exactly what their legal arguments are. It was just referenced
Speaker 1: in court that this settlement had been reached and there
Speaker 1: were not a lot of details given other than what
Speaker 1: we've already discussed and the settlement is due to be
Speaker 1: signed tomorrow, so we should get more details. But I
Speaker 1: know that new GM is saying that this deal was
Speaker 1: reached secretly. Uh. They seem to think that they should
Speaker 1: have been involved somehow, and that this was basically they
Speaker 1: used the word plotted, uh, you know, behind their backs.
Speaker 1: So whereas the plaintiffs attorney says that this is exactly
Speaker 1: what GM bargained for when it put this provision in
Speaker 1: the two thousand nine bankruptcy bankruptcy sale in the first place,
Speaker 1: So there was always going to be that risk at
Speaker 1: thirty five billion dollars in claims could be reached or
Speaker 1: exceeded and trigger this, And they say they're just going
Speaker 1: by the books. So Eric GM also called it a
Speaker 1: contrived scheme. But how do they reach this point where
Speaker 1: they're about to sign a settlement, according to the plantiffs attorney,
Speaker 1: and they're just realizing this now, why didn't this come
Speaker 1: up earlier? Well? I think that that's another good question.
Speaker 1: I think the judge will probably be asking that question
Speaker 1: as well. Um, it's notably the trust and the plaintiffs
Speaker 1: they are going to argue. They said they'll argue that
Speaker 1: they don't think new GM actually has any right to
Speaker 1: object here. They say that the language and the sale
Speaker 1: in this provision that we discussed about the thirty five
Speaker 1: billion dollar marks, that that language is very clear, and
Speaker 1: that the trust is the only entity that is has
Speaker 1: the authority to you know, deal with these claims and
Speaker 1: approve or deny them. So um, I think they're going
Speaker 1: to argue that they're just going by what is in
Speaker 1: the sale agreements and that GM is just sort of
Speaker 1: out of luck. But it's a good question why this
Speaker 1: is just coming up now, just you know, a few
Speaker 1: days before the settlement is supposed to be signed. But
Speaker 1: of course even after it's signed, judge still has to
Speaker 1: approve it. So um, there they'll be making all these
Speaker 1: arguments in court, I would imagine very soon. Eric. When
Speaker 1: you talk about these ten billion dollars and previously disputed claims,
Speaker 1: what are those? What's the biggest category are we talking about,
Speaker 1: like the claims that that the defect lowered car resale
Speaker 1: values or something else? Right, So these are four hundreds
Speaker 1: to five hundred personal injury claims. They're not all just
Speaker 1: related to the ignition switch issue, um, but just personal
Speaker 1: injury claims from before the bankruptcy, but also UM a
Speaker 1: class action suit that has eleven point nine million class
Speaker 1: members UM, and those are related to the so called
Speaker 1: economic losses UH that these vehicles suffered as a result
Speaker 1: of the ignition switch recall and also other recalls, a
Speaker 1: series of recalls in two thousand fourteen. Uh. So there's it.
Speaker 1: Quite a big settlement, UM and UH it covers a
Speaker 1: wide array of different types of lawsuits that GM frankly
Speaker 1: thought they'd put behind them when they signed that two
Speaker 1: thousand nine bankruptcy. About thirty seconds here, Eric, who is
Speaker 1: going to have to sign this settlement? Is New GM
Speaker 1: going to have to sign the settlement? No, this is
Speaker 1: a settlement between only the trust that was set up
Speaker 1: for the general unsecured creditors of the so called old
Speaker 1: GM that was when the company was basically split as
Speaker 1: part of that bankruptcy sale. UH. And this plaintiffs group
Speaker 1: with the plaintiffs attorney Steve Berman. UM. That's those are
Speaker 1: the only two signs. And of course GM New GM
Speaker 1: will be objecting to it and trying to stop it.
Speaker 1: You really need a diagram to figure this one out.
Speaker 1: Thanks so much for helping us with that. That's Bloomberg
Speaker 1: News legal reporter Eric Larson, who has written about this case.