Report : GM Faces $1 Bln Reckoning In Disputed Ignition-Switch Settlement

(RTTNews) - General Motors Co. (GM) faces a potential payout of $1 billion in stock to address claims related to the Detroit auto giant's ignition-switch crisis, depending on the outcome of a looming trial, the Wall Street Journal reported.

The report noted that the trial, set to start Monday in a Manhattan federal bankruptcy court, centers on whether General Motors can stop a deal reached in August between ignition-switch plaintiffs and a trust representing creditors of so-called Old GM, the assets the auto maker left behind in 2009 as part of its $50 billion government rescue and restructuring. The terms of the August deal contemplated forcing General Motors to pay the Old GM trust $1 billion in stock.

The Journal reported that an adverse result for GM, which isn't assured, would likely be challenged in court well into 2018. A settlement is possible before or during the proceedings, though lawyers on all sides were preparing to square off days before the trial's kickoff.

GM faced criminal charges and has paid legal settlements totaling more than $2 billion after conceding in 2014 that it failed for more than a decade to recall millions of vehicles with defective switches now linked to 124 deaths, despite internal evidence of a safety problem. The switch can slip from the run position, cutting engine power and disabling safety features including air bags.

GM earlier accused parties in the August deal of "secretly plotting" and has reached a separate pact with the Old GM trust that would help it avoid the payment and render the earlier deal invalid.