Since bankruptcy lawyers have deemed the “Old GM” untouchable in the courtroom, certain plaintiffs are getting creative and suing General Motors for “bankruptcy fraud.”
When the “New GM” was being organized, U.S. Bankruptcy Judge Robert Gerber freed General Motors from most of its liabilities, leaving some warranty obligations and similar items to be settled later. However, as current evidence suggests that General Motors knew about the defective ignition switches since 2001 yet continued to install them in vehicles, plaintiffs are suggesting GM committed fraud by not revealing the defects.
Owners of cars affected by the ignition switch recall must prove their fraud allegations, according to bankruptcy attorney Chip Bowles of Bingham Greenebaum Doll LLP. Bowles told Automotive News, “This is very difficult. However there is a middle ground and that would be the parties requesting discovery [which involves requesting pre-trial evidence from GM]. There is a decent chance that Gerber would allow discovery,” Bowles said.
For their part, General Motors has gone on record stating that they aren’t trying to shirk their responsibilities regarding lawsuits involving accidents and injuries. However, the company has told the judge that he must rule on this case before other lawsuits against GM are able to proceed.