#AUTOS AUGUST 17, 2017 / 11:56 AM / AN HOUR AGO

GM creditor trust drops settlement with ignition switch plaintiffs

Brendan Pierson
3 MIN READ

NEW YORK (Reuters) - In a blow to people suing General Motors Co (GM.N) over faulty ignition switches and other alleged vehicle defects, a trust that holds many GM liabilities from before its 2009 bankruptcy has canceled a settlement that sought to force the automaker to pay $1 billion in shares to resolve millions of claims.

The claims stem from GM's 2014 recall of 2.6 million vehicles with defective ignition switches, including one linked to 124 deaths. They have since expanded to include millions of financial loss claims and hundreds of personal injury and wrongful death claims over a variety of alleged defects in millions of cars.

The settlement, first disclosed at a court hearing last week, would have called for the trust to accept $10 billion in claims, triggering a provision in GM's bankruptcy plan that could have forced it to pay $1 billion in stock to the trust to pay off the plaintiffs.

GM opposed the settlement.

Lawyers for the plaintiffs said in a court filing late on Wednesday they had learned of the "astonishing and improper" decision to jettison the settlement the day before a scheduled court hearing on the matter.

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