Judge’s Ruling Protects GM Against Certain Ignition Switch Lawsuits
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A federal judge ruled recently that GM’s 2009 bankruptcy protects the New GM from potentially billions of dollars in claims related to faulty ignition switches. The main point of contention in the case were some 140 lawsuits from plaintiffs, primarily from the families of 84 people whose deaths have been linked to the faulty ignition switches that occurred prior to the bankruptcy.
You’ll recall that the GM entity that existed prior to the bankruptcy filing, known as “Old GM”, is no more (except for its shell, which exists to pay out bankruptcy claims). All of its assets were sold to a “New GM” under completely new ownership, and all of its liabilities (up to the amounts permitted and possible) were to be paid out of a fund of segregated assets per the confirmed plan of reorganization. As I discussed in an earlier article on this site, the assets acquired by New GM were presumed at the time to be “free and clear” of any interests or liens in accordance with the bankruptcy code. The plaintiffs subsequently argued that the bankruptcy proceedings were pushed through hastily, violating their right to due process, and that Old GM had purposefully concealed the defects. Plaintiffs had only been afforded some 18 days after the filing of the bankruptcy petition to make their claims, and notification of such deadline was generally limited to notice publication made in major national newspapers. They asserted that this was an insufficient amount of time to identify and present their claims prior to New GM’s acquisition of the operations of Old GM…
Judge’s Ruling Protects GM Against Certain Ignition Switch Lawsuits
