GM ultimately admitted delaying a necessary recall which eventually involved millions of vehicles.

General Motors just avoided a $1 billion bill, as a New York bankruptcy judge threw out a settlement agreement that would have forced GM to pay $1 billion in stock to owners of cars with defective ignition switches.

The case is part of the automaker’s recall of 2.6 million small cars equipped with faulty ignition switches that resulted in the deaths of 124 people. The vast majority of the cars were produced before GM’s bankruptcy in 2009.

The automaker’s bad assets were lumped together and considered “old GM,” technically called Motors Liquidation. Wilmington Trust, the M&T Bank Corp. unit that oversees the bankruptcy claims filed against the “old GM” trust, struck the deal to resolve hundreds of personal-injury cases and a class-action suit over millions of vehicles that allegedly lost value due to a series of 2014 recalls.

As part of the deal, the trust agreed to pay the two sets of plaintiffs $15 million in exchange for accepting $10 billion in claims. By accepting these claims, it would have pushed the total number of claims accepted by the trust past $35 billion.

(GM catches break in ignition ruling. Click Here for the story.)

In a separate agreement, GM agreed to pay, through the transfer of $1 billion in GM stock, to the trust. The trust then agreed to give those shares to the claimants to help pay their claims.

However, the trust never signed the deal with the claimants, in the hope of getting a better deal. Instead, it accepted GM’s offer to help pay for the trust’s legal defense against the claimants. GM argued the deal between the trust and the claimants had been negotiated in secret and couldn’t be enforced.

(To see more about GM and the ignition lawsuits, Click Here.)

Judge Martin Glenn of U.S. Bankruptcy Court in New York agreed, saying that the trust acted in bad faith while reaching a $15 million class-action settlement and backing out of the deal at the last minute in hopes of getting a better one.