NEW YORK (TheStreet) -- General Motors' (GM) compensation program will begin taking claims, the first step in distributing $400 million reserved to give relief to victims of its vehicles' defective ignition switch.
Kenneth Feinberg, a compensations expert who previously resolved claims in the BP (BP) Gulf of Mexico oil spill, announced the facility as in operation Friday. It will now accept submissions through to Dec. 31 and distribute settlements to cases of death and physical injury stemming from the defect.
The fund could receive a wave of several hundred claims in just the few days, according to preliminary estimates compiled by Reuters.
General Motors has confirmed 54 accidents and 13 deaths linked to the defective ignition switch, a malfunction which could cause the engine stall during operation and airbags to fail to deploy. The Detroit automaker recalled 2.6 million older vehicles in February due to the faulty ignition switch. However, so far this year, a total 29 million vehicles have been recalled linked to separate malfunctions.
Though General Motors has reserved $400 million for compensation, no cap has been placed on the fund and the company said the final awards total could exceed $600 million. Feinberg has been assigned the authority to determine the amount to award claimants.
If claimants accept awards offered, pending lawsuits would have to be dropped. The most recent, filed in U.S. District Court in Manhattan, is on behalf of 658 people affected by the ignition defect, 29 of whom were killed in crashes and 629 who suffered physical injury.
Year to date, shares have lost nearly one-fifth of value on the recall scandal, tumbling 18% to settle around $33.52 as of Friday's session.
--Written by Keris Alison Lahiff in New York.