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Bankruptcy Ruling Protects G.M. From Ignition Lawsuits

Bankruptcy Ruling Protects G.M. From Ignition Lawsuits

The ruling reaffirmed that lawsuits tied to accidents after the 2009 bankruptcy could still proceed.

Late Wednesday afternoon, federal bankruptcy judge Robert E. Gerber ruled that the liability shield in the 2009 agreement that lifted G.M. from bankruptcy should be allowed to remain in place.

According to the New York Times , this ruling saves General Motors billions in claims and shuts down not only lawsuits stemming from accidents that took place before July 10, 2009 due to a faulty ignition switch, but also most of the suits seeking monetary damages for the value lost from the defective cars. The faulty ignition switch which G.M. admits many of their employees were aware of and failed to notify consumers, is linked to at least 84 deaths and hundreds of injuries. The decision allowed for lawsuits related to accidents after the 2009 bankruptcy to still continue.

The outcry after the defect was made public, prompted G.M. to overhaul its safety practices and recall over 30 million vehicles worldwide, which included approximately 2.6 million for the faulty ignition switch last year.

This shield was challenged by personal injury attorneys and other lawyers who were suing G.M. on behalf of owners to recover damages for the diminished value of the recalled cars. The plaintiffs’ attorneys expressed their decision to appeal this ruling.

The families of the victims who died were very emotional and upset with the ruling feeling G.M. was getting off easy with just a slap on the wrist. Some families were able to get approximately $1 million or more from G.M. for each death through a compensation fund administered by attorney Kenneth R. Feinberg.

Attorneys are seeking a remedy for their clients. Steve Berman, who is a co-lead counsel representing plaintiffs nationwide in litigation against G.M. stated “It cannot be the law that Old G.M. could hide the defects, and subsequently use the bankruptcy court as a shield.” Although this ruling appears to be good news for G.M., the matter will not be resolved until the appeals process is concluded.

Categories: In The News

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