When General Motors underwent its restructuring in 2009, it left its past in “Old GM”, or General Motors Corp. With its bailout and bankruptcy, “New GM” was created, or General Motors LLC.
Following the fallout of the ignition switch recall scandal, a U.S. judge ruled New GM was protected by lawsuits against Old GM. Now, that changes.
According to The Detroit Free Press, a federal appeals court has overturned the decision, allowing lawsuits against GM to proceed. This means New GM is responsible for Old GM’s actions, specifically, not disclosing the ignition switch fault during its restructuring, and failing to address it altogether.
“Old GM did nothing, even as it knew that the ignition switch defect impacted consumers,” the court ruled.
The panel added: “New GM essentially asks that we reward debtors who conceal claims against potential creditors. We decline to do so.”
The ruling brings hundreds of lawsuits over the ignition switch recall back to life, and also lawsuits regarding loss of value to vehicles due to the scandal.
Plaintiffs’ lawyers are already celebrating the victory for their clients.
“I was so relieved for my clients,” Texas attorney Robert Hilliard said in an interview. “For years many of the victims of the GM ignition switch have had their claims languishing in bankruptcy court. These folks will have their day in court.”
GM settled with many of those affected by the ignition switch scandal, forfeiting their right to sue the automaker. General Motors awarded nearly $600 million through a compensation fund, with each victim receiving a minimum of $1 million.
The automaker stands ready to defend itself, however, stating each victim will still have to prove their case.
“We are reviewing the ruling and its impact,” GM spokesman Jim Cain said in a statement. “Even if some claims are ultimately allowed to proceed, the plaintiffs must still prove their cases.”