Loyal readers of GM Authority should be familiar with the lawsuit(s) brought upon General Motors claiming that its cars were devalued due to the ignition switch debacle. So what happens if GM loses that case? GM’s tab could grow by $2 billion. At issue is whether GM is responsible for vehicles it built and sold before its July 2009 bankruptcy.
Automotive News is reporting that today GM is arguing in court filings that it shouldn’t owe money to the 100+ folks who have filed lawsuits against GM, as its bankruptcy plan shields the “New GM” from many of the “Old GM”‘s obligations. GM is expected to ask the judge − the same one who oversaw 2009’s Chapter 11 proceedings − to uphold the bankruptcy shield. Already GM has set aside $600 million to compensate people who were injured or lost loved ones in the affected cars.
“We believe our position is consistent with federal law and previous decisions of the bankruptcy court, which have been upheld on appeal and are cited in GM’s motion papers,” GM said in a statement yesterday.
If the judge rules that vehicle owners can try to collect economic damages on pre-bankruptcy cars, it would add about $2 billion to the potential payout, according to Bloomberg.