Bankruptcy Judge Rules Against Settlement Triggering GM Payout

General Motors Co. avoided a potential $1 billion-plus stock payout to address claims stemming from the auto giant's ignition-switch crisis after a judge found a settlement between plaintiffs and a trust for the company's bankruptcy estate unenforceable.

U.S. Bankruptcy Judge Martin Glenn on Thursday ruled that an August deal reached between ignition-switch plaintiffs and a trust tasked with compensating creditors of so-called Old GM couldn't go forward because the settlement lacked necessary signatures. Old GM is the term often used to describe the assets GM left behind in 2009 as part of its $50 billion government rescue and bankruptcy restructuring.

The ruling effectively allowed GM to avoid the consequences of the deal, which had contemplated forcing the auto maker to pay the Old GM trust roughly $1 billion in stock to address claims from car-accident victims and customers seeking recompense for declining vehicle values arising from faulty ignition switches.

Write to Mike Spector at mike.spector@wsj.com

(END) Dow Jones Newswires

January 18, 2018 15:27 ET (20:27 GMT)