The Latest in GM’s Bankruptcy

The latest debate in the General Motors Co.’s bankruptcy is if GM can be held liable for the actions that took place before they declared in 2009. The company is now asking a U.S. bankruptcy court to shield them from those prior claims.

Should Not Receive Usual Bankruptcy Protection

Prosecuting lawyers suing GM argue the company should not receive the usual bankruptcy protection benefits because it concealed problems with its ignition switches during the time period the court was making decisions on the bankruptcy. The prosecution team also feels the company’s motion is just an attempt to force settlements in the dozens of lawsuits regarding faulty ignition switches which have caused at least 13 deaths. The company has admitted to knowing about the problem for more than a decade, but did not start recalling the cars until February 2014.

Faulty Switches

The faulty switches can move unexpectedly from the “run” position to “accessory” or “off.” This can shut down the engine and knock out power-assisted steering and brakes, thus causing steering to become difficult. Surprised drivers can lose control of their cars and crash, and if the engine is off, the air bags won’t inflate.

New GM v. Old GM

GM contends that under the bankruptcy, which ended on July 10, 2009, the assets and liabilities of the old General Motors Inc. were split. Good assets were sold under court order to “New GM,” and “New GM” took on only three categories of liabilities. These were liabilities for post-bankruptcy crashes that involved cars made by “Old GM” that caused injuries, deaths or property damage; and warranty and lemon law claims.  The bad assets and most liabilities were put towards “Old GM,” which was left behind. GM contends that recalled cars were made and sold by “Old GM.”

The motion states, “Plaintiffs assert claims for liabilities that, under the sale order and injunction, were retained by Old GM.” Additionally, it asks for the dismissal of about 50 class action lawsuits that seek damages for lost car values, and an order to stop similar new claims.

For information and guidance on bankruptcy, you need the experts at Simon Resnick Hayes, Attorneys at Law.

Source: ABC News, GM,Lawyers Fight Over Bankruptcy Protections, April 22, 2014