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As Companies Face Bankruptcy, Lawyers Settle Some Cases

The Daily News ran a story this morning that poses a troubling question to New York personal injury lawyers: What happens to a lawsuit when the company you are suing goes bankrupt?

This unfortunate circumstance is becoming more common as the economy suffers the effects of the current recession. It is a real concern for personal injury lawyers in New York and around the country.

Essentially, as the News story puts forth, anyone with a case pending against a company facing bankruptcy is pressured to settle his or her case before the company goes under. This prevents them from becoming unsecured creditors in the event of the company’s bankruptcy and getting little or no money, even if they receive a favorable verdict.

Settling certain cases early, even if it means accepting a fraction of what they would get in more favorable circumstances, seems a prudent course to many New York City personal injury lawyers in these dire economic times.

In its story, the News focused on several cases against General Motors and Chrysler, the most prominent companies facing bankruptcy right now. Amanda Dinnigan’s case is especially tragic.

An eight-year-old girl who became a quadriplegic after a car accident, Amanda requires constant medical care. Her father, who is suing General Motors over a faulty seat belt, has built her a “mini-intensive care unit” in his home and estimates his daughter’s medical bills total $500,000 a year. While the father’s health insurance pays the bills for now, he is worried for his daughter’s security after he is gone.

With General Motors nearing bankruptcy, the family’s New York personal injury lawyer is under pressure to settle their case for far less than it is worth to protect the family from receiving nothing.

It is a tough position for families, who know the settlements will not enough to provide the care their loved ones require, and it is a tough position for personal injury lawyers, who know that under different circumstances they could help these families get that care.


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