Judge Throws Out GM’s $1 Billion Ignition Switch Settlement

A federal bankruptcy judge in the U.S. has tossed out a settlement that would have required General Motors to pay $1 billion in stock to owners suing the company over its faulty ignition switches.

Judge Martin Glenn of the U.S. Bankruptcy Court in New York determined that the agreement which car owners claimed to have reached with the ‘Old GM’ trust was invalid without signatures. The owners claimed that Old GM had acted in bad faith and indicated the agreement was binding without a signature, Reuters reports.

Car owners suing the automaker reportedly reached an agreement in August and that General Motors would be forced to contribute $1 billion in stock as part of the settlement. Shortly after, Old GM walked away from the deal and accepted an offer from General Motors to help pay for its defense against car owners.

In his ruling, Judge Glenn pointed out Old GM’s “dishonesty, or bad faith” but said that the law didn’t permit the enforcement of an unexecuted agreement.

In response, a lawyer representing the car owners, Steve Berman, said they saw a small victory in the ruling.

“Judge Glenn clearly thought the trustee and (law firm) Gibson Dunn acted in bad faith and we see therefore they both must be removed as trustee,” Berman said.

General Motors has paid roughly $2.5 billion to settle its ignition switch-related claims.