GM (a.k.a. Obama Administration) Cave on Old to New Product Liability. Ish.
Facing mounting political pressure, GM’s new masters have agreed to allow new liability cases against products made by old (pre- and intra-bankruptcy) GM to proceed against New (post-pre-bankruptcy). According to the New York Times, the deal went down in federal bankruptcy court on Friday. “G.M. and the administration’s [hands-off] auto task force have been negotiating with more than a dozen state attorneys general who have objected to the company’s plan to sell its desirable assets to a new, government-financed entity. A hearing to approve the plan is scheduled for Tuesday in federal bankruptcy court in Manhattan.” So, that’s that then. The Ad Hoc Committee of Consumer Victims of GM and Chrysler can relax. Comcast can kick back. Rep. Andre Carson can chill. Or can they?
Again, this agreement applies to new cases against Old GM. The Wall Street Journal:
Car-accident victims with pending lawsuits and those who had won damages against GM before it filed for bankruptcy would still be unable to bring claims against the new GM,” reports. “They would remain with other unsecured creditors making claims against the ‘”old GM.” As GM’s old estate winds down, those victims are likely to recover little or nothing.
Bottom line: this settlement leaves some claimants out in the cold. And raises questions about the fairness of post-C11 Chrysler’s fast walk away from its product liability legacy.
The [The Ad Hoc Committee of Consumer Victims of GM and Chrysler] said new GM should take on claims from victims already hurt from defective GM vehicles. It also said Chrysler should take responsibility for future claims, as well as those with pending lawsuits and successful cases brought against Chrysler before it filed for bankruptcy.
The committee said Chrysler’s unwillingness to take on future claims as GM has represented “an unacceptable double standard.”
Meanwhile, this settlement opens the door for other politically-connected parties who feel aggrieved by old GM. Dealers’ choice?
More by Robert Farago
Comments
Join the conversation
lw: Maybe they've already started. 'Your idea of Buick just went boom' (or something).
When this subject came up last week, I was thinking of an "asbestos 2.0" slush-fund that the "new" companies could fund but not be directly liable for. Sort of like VEBA-for-lawyers type of thing. But I guess that would've involved some press releases, so instead it's swept under the rug here. Either way I knew the trial-sharks were going to get theirs, Donkeys wouldn't have it any other way given that they are the trial-attorneys' bitches. That same dynamic will also cripple any health-care reform, because any REAL reform in that business involves reforming the malpractice-tort industrial complex. Not gonna happen with the Donks.