On September 3, Volkswagen admitted to U.S. regulators that it had used illegal "defeat device" software in hundreds of thousands of its TDI diesel cars.

But that information did not become public until September 18, when the U.S. Environmental Protection Agency (EPA) announced VW's cheating in a press conference.

That delay led German shareholders to file a lawsuit, claiming Volkswagen violated national laws by waiting too long to inform them of the situation.

DON'T MISS: German shareholders sue VW over diesel emission scandal

Now VW lawyers claim the delay was simply the result of the company's attempts to cut a deal with regulators.

In a 113-page report submitted February 29 to the German court handling the shareholder lawsuit, law firm Goehmann claimed the delayed announcement was supposed to create time for talks with regulators, according to Reuters.

Those talks could have been jeopardized if knowledge of Volkswagen's cheating was made public, the lawyers claimed.

2015 Volkswagen Golf TDI SE

2015 Volkswagen Golf TDI SE

Last week, a Volkswagen statement called the shareholder lawsuit "without merit."

Citing information in a still-to-be-released report from research firm Jones Day, the company admitted that then-CEO Martin Winterkorn may have been informed about the "defeat device" software as early as May 2014.

However, the warnings were not substantial enough to make him fully aware of the problem, VW argued.

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VW hoped to strike a deal that would limit the financial impact of the scandal on the company, according to the law firm's report.

That's something Volkswagen hasn't been able to avoid.

The company faces lawsuits from consumers and regulatory bodies in multiple countries, including a U.S. Justice Department suit that could result in up to $48 billion in penalties.

2015 Volkswagen Golf TDI SE

2015 Volkswagen Golf TDI SE

And VW still hasn't been able to get modifications approved for the nearly 600,000 affected diesel cars on U.S. roads.

A proposed fix for the 482,000 cars equipped with 2.0-liter four-cylinder engines was submitted to the EPA and California Air Resources Board in November.

MORE: Judge Tells VW To Find Diesel Fix By March 24: 'Six Months Is Enough'

But the agencies subsequently rejected it, with CARB saying the proposal lacked sufficient detail on its effects on performance and fuel economy.

A new plan for the 2.0-liter cars has not been revealed, but last month Volkswagen submitted a separate proposal for the 85,000 cars equipped with 3.0-liter V-6 powertrains.


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