Just yesterday, a US Bankruptcy Judge upheld the “new” General Motors’ shield against lawsuits pertaining to the actions of “old,” pre-bankruptcy GM. This means that GM is effectively protected from dozens of lawsuits accusing the automaker of covering-up the ignition switch defect now linked to over 200 death and serious injury claims, reports Automotive News.
Those victims who have been approved through the dedicated ignition switch victim compensation fund will still receive compensation, while the majority of these dozens of suits against pre-bankruptcy GM pertained to the depreciation of vehicle value that owners faced in the wake of the ordeal.
However, some number of death and injury claimants did not accept treatment through the compensation fund, and they – along with the aforementioned plaintiffs seeking damages for vehicle depreciation – will be barred from suing the “new,” post-bankruptcy General Motors. Instead, those suits can only be leveled at the “old” GM, the shell company of bad assets that General Motors shed during its restructuring under Chapter 11 bankruptcy.
But, while “new” GM is shielded from the actions of “old” GM through this legal shield, plaintiffs still have other avenues by which to seek legal justice. Automotive News quoted U-M Business School Law Professor Erik Gordon on the matter, who said that “victims still can sue GM for its actions after the bankruptcy, including allegations that the company continued to cover up what it knew about the switches or didn’t recall cars it knew were defective.” One of the lead lawyers for the plaintiffs, Steve Berman, was pleased that suits against the “new” GM’s conduct could continue, but said that plaintiffs still plan to appeal on the ruling.
The US Bankruptcy Judge who made the ruling, Judge Robert Gerber, was also responsible for the original 2009 ruling which gave the new General Motors a shield against old GM’s actions. During a prior hearing, he expressed some doubt toward that original ruling, remarking that he had essentially given GM a “get out of jail free” card, regardless of whether there was any cover-up or willful misdoing on GM’s part.
Judge Gerber said that he will certify the case for review by the 2nd U.S. Circuit Court of Appeals.