If investigators can prove General Motors knew about the now widely publicized ignition switch safety defect when testifying during its 2009 bankruptcy, the company may be held accountable for fraud against the court, according to a report from Bloomberg Businessweek.
U.S. Bankruptcy Judge Robert Gerber said if GM “knew about the switch problem and intended to keep it from me, that might constitute fraud on the court,” at a hearing in Manhattan yesterday. Additionally, if plaintiffs suing the automaker because their vehicle lost value due to the ignition switch recall can prove this, they may have a stronger case than they currently do, Gerber also noted.
Then CEO of GM, Fritz Henderson, said he “did not know anything about it (the ignition switch),” in an email to Bloomberg. If lawyers can prove he did in fact know about it in 2009, GM may face an expensive penalty. One lawyer representing plaintiffs in a fallen car-price suit has demanded $10 billion for car owners who weren’t injured in accidents, but just have Cobalts and Ions with lowered resale value.
Gerber didn’t accuse anyone at GM of deceiving him during its restructuring in 2009, and instead said he was offering a hypothesis on how customers in lost resale value suits could win their case. He was the same judge who freed GM of any accountability for defective products that were produced pre-2009 under the guidance of ‘Old GM’.
Lawyers representing car owners say Gerber’s 2009 ruling lifting GM’s accountability doesn’t apply to them because the automaker was aware of the defect and didn’t tell customers at the time of the bankruptcy. Anton Valukas probe of GM indicated none of the senior executives at the time knew about the faulty switch.
Gerber yesterday met with lawyers filing about 90 different lawsuits on behalf of GM customers with vehicles they say have lost their value. He is tasked with deciding whether or not to allow the cases to proceed or to bar the larger claims. Gerber won’t hold another hearing on the matter until Sept. 15 or later, a GM timetable indicated.