General Motors top lawyer Michael Milikin said Thursday the company will continue to use its bankruptcy protection from court claims as investigators attempt to find out what took the company so long to recall millions of small cars with a faulty ignition switch.
Milikin told the U.S. Senate panel that it will only pay claims to victims which are processed through the fund ran by compensation expert Kenneth Feinberg. For all other claims surrounding the ignition switch crisis, the automaker will use the immunity handed down when it underwent Chapter 11 bankruptcy organization in 2009, which barred plaintiffs from suing ‘New GM’ for claims related to or caused by actions of ‘Old GM’. Milikin, whom GM CEO Mary Barra said was a man of “high integrity”, also said the company will not reopen already settled claims linked to the ignition switch or release documents given to Anton Valukas as part of the former U.S. Attorney’s investigation into the company.
Feinberg is overseeing an uncapped fund which will payout all victims involved in accidents in recalled cars where the airbag didn’t deploy. Compensation amounts from the fund have no limit, but are based on multiple factors including income, age, number of dependents and earnings and the costs of hospitalization. Contributing factors, such as whether or not the driver was intoxicated or wearing a seat belt, will not be considered when deciding compensation.
Victims or victim’s family members must agree to not sue GM if they accept the settlement. If they do proceed with a lawsuit, GM could use its bankruptcy shield as protection, dismissing it of any responsibility for product defects which occurred before July of 2009. The only way GM could be found responsible of defects occurring before 2009 would be if a judge can prove execs knowingly hid the ignition switch defect during its bankruptcy proceedings.
Feinberg’s office is expected to receive victim compensation claims for deaths and injuries involving certain model year Cobalts and other small vehicles between August 1 and December 31.