Chalk up another reason why Chrysler should have been allowed to fail. The New York Times reports that if Chrysler’s restructuring is approved it would allow the automaker to evade liability for injury-causing defects on its vehicles. An Automotive News [sub] write-up of Chrysler’s creditors reveals that the Ad Hoc Committee of Consumer-Victims of Chrysler LLC consists of 150 members seeking an estimated $650 million in damages allegedly caused by Chrysler vehicle defects. Under current reorganization plans, those creditors would be left with no recourse after Fiat assumes “good Chrysler’s” assets.
If GM follows Chrysler’s example (which one law professor calls “bizarre”) even more consumer lawsuits could be shelved. A coalition of consumer advocates including Public Citizen, the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety and the National Association of Consumer Advocates have petitioned the court to transfer legal liability to the new Chrysler. Since Chrysler is already walking away from Lemon Law protections (bouncing checks all the way), it’s probably safe to assume that the Pentastar will be reborn free from lawsuit claims. Because when has the bailout ever been about the best interests of the consumer?