By on February 18, 2015

gm-renaissance-center-03

Should a federal judge decide General Motors acted in the wrong during bankruptcy proceedings, the automaker may see its protections considerably narrowed.

According to Reuters, the point of contention is whether or not GM purposely hid the defects linked to the February 2014 ignition switch recall during proceedings in 2009. Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York said that he would reassess the terms that carved Old GM from New GM if the latter violated due process, allowing affected consumers to go after the automaker for defects it knew of after the exit from bankruptcy.

Gerber’s potential decision won’t sit well with those filing lawsuits over issues of lost value, injury and death as a result of those defects. The plaintiffs are asking for GM to pay compensation in the billions of dollars for its pre-bankruptcy actions, which a modified sale order would mitigate. Gerber is expected to make his decision sometime in the coming weeks at the earliest.

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83 Comments on “General Motors’ Bankruptcy Protections Could Narrow Pending Ruling...”


  • avatar
    maxxcool7421

    I for one would **LOVE** to see all bankruptcy protection concerning product VS personal injury or death suits negated.

    The bankruptcy was engineered in bad faith with full knowledge of the execs.

    Personally, there still should be ”pyina” prison time and pay the settlements out of the execs pay 1st then the company coffers.

    • 0 avatar
      Pch101

      In other words, you’re opposed to the concept of Chapter 11.

      If asset buyers were forced to assume liability, then they would simply drop the price by the amount of the contingent liabilities or else avoid buying the assets entirely.

      • 0 avatar
        mitchw

        The corporation still has to disclose liabilities. Doesn’t there have to be a negative incentive to keeping stuff quiet? And how does Gerber to rule when the US attorney is still investigating the question of what GM knew? How does part of a corporate person know something while it’s head does not.

      • 0 avatar
        BrunoT

        That’s true. But I’m not sure that is a bad thing. Who loses in this situation if they are forced to assume the liabilities from suits? The creditors and bond holders. Why should they go above victims who have won awards in court from the company? All are owed money from the company. But the creditors and bond holders were able to do due diligence before extending credit to the company. A product liability victim would not have the same ability really.

        • 0 avatar
          Pch101

          “Why should they go above victims who have won awards in court from the company?”

          Because they weren’t parties to the claim, and paid a purchase price that was based upon the fact that they weren’t liable.

          Bankruptcy stops the clock on liability. The old lawsuits belong to the old company. This is simply what BK is supposed to do.

          Liability drops the price or kills the deal entirely. You’re arguing in favor of a bait-and-switch.

          • 0 avatar
            CJinSD

            http://dailykanban.com/2015/02/ballad-dirty-harry/

            This is worth a read if you’re worried about people falling victim to a bait and switch.

          • 0 avatar
            Pch101

            Do you have a source from an actual news site?

          • 0 avatar
            CJinSD

            Considering the numerous direct quotes and linked articles in Ed’s story, I’d say you should know that you’re just in denial of how fecklessly wrong you’ve been about the intentions of those you’ve defended. Or you could be completely insane…

          • 0 avatar
            Pch101

            Based upon the domain name and who writes for it, I’m not going to click on the link. The track record is what it is.

            If you have a better source for whatever point that it is that you’re trying to make, then provide it. If you don’t have a better source, then the point probably wasn’t worth making.

          • 0 avatar
            thornmark

            Looks like it:
            http://www.autonews.com/article/20150218/RETAIL/150219835/buffett-soros-boost-stakes-in-gm-report-says

          • 0 avatar
            Pch101

            CJ was excited about a stock purchase? Well, OK then.

      • 0 avatar
        thornmark

        >>In other words, you’re opposed to the concept of Chapter 11<<

        Is that what that was?

        • 0 avatar
          mike978

          I agree with one of the premise’s of the article CJ links to – namely that GM shouldn`t be pressured by short term “investors” to give $8 billion in share buybacks.
          I am surprised to see CJ complaining about this since he seems very proud of his role in the financial services industry (aka Wall Street) and their short term thinking of loading companies up with debt and getting quick payouts.
          Also odd that Ed and other’s like him are complaining about private companies (the hedge funds) profiting.

          • 0 avatar
            Pch101

            I’m glad that I didn’t bother to read the link.

            I could explain the share buyback issue and when that kind of action is appropriate, but I’m sure that the time spent on it would be wasted.

          • 0 avatar
            CJinSD

            I worked in IT. You’re not clever or perceptive mike.

          • 0 avatar
            mike978

            My mistake, I made the assumption based upon you working at Bears Stearn, before it crashed and alsmost took the economy with it.
            At least you have now confirmed you don`t work as a financial expert.

      • 0 avatar
        jdmcomp

        It would be one thing if Chapter 11 had been followed but instead the Obama Administration screwed with the terms and caused massive changes in the terms of settlement. Bond holders got screwed if I remember right. Yes,I believe in the law, but not the current administrations actions in bending the law to suit their will.

        • 0 avatar
          Pch101

          You remembered wrong. But I’ve come to expect that around here.

        • 0 avatar
          APaGttH

          …but instead the Obama Administration screwed with the terms and caused massive changes in the terms of settlement…

          The auto industry bailout was created, formulated, and started by the Bush Administration. The Obama Administration executed the plan. Bush left the White House on January 21, 2009, the pre-packaged bankruptcy train started moving less than 60 days later – hardly time to formulate a ground up plan for a major bankruptcy.

          The whole “Obama did it thing” is even something that the GM death watch TTAC has now made crystal clear – Obama just did the plan given to him and the Bush Administration led the bailout. Hell, Bush is on the public record for taking credit for doing it, and saying he would do it again.

          Please list all the DIP financiers that stood up in 2009 and said why yes by golly, I’ll provide DIP to GM and/or Chrysler.

          • 0 avatar
            mkirk

            Whatever this was or whoever was responsible for it, it was not Chapter 11. When it was happening people went out of thier way to point out that it was in fact not bankruptcy and over and over on these forums people have stated Chapter 11 was a nonstarter because there was no one available with the cash to make it work so the company would have been liquidated.

            So wherever one may fall on this debate, this was not a standard bankruptcy.

            Personally, I think this will all be found to be on the legal up and up (the actually legality really has no bearing on this decision ultimately in my opinion), but the ugly details of a potential coverup to secure John Q. Taxpayer’s money could cause a lot of PR heartache for GM. It’s been like 40 years and people still bring up the Pinto which killed half as many folks and didn’t involve any contreversial bailout.

          • 0 avatar
            Pch101

            There are two types of business bankruptcies in the US: Chapter 7 and Chapter 11.

            This was an 11.

          • 0 avatar
            thornmark

            >>The auto industry bailout was created, formulated, and started by the Bush Administration. The Obama Administration executed the plan.<<

            You got it all wrong. Bush provided a bridge loan against the wishes of Congress.

            THe terms of the bankruptcy were set by current admin – they didn’t execute a plan – they created the plan. No GOP administration would put the UAW ahead of the secured creditors. Bondholders wanted a debt for equity swap, under normal bankruptcy terms.

            "On the March 30, 2009 deadline President Barack Obama declined to provide financial aid to General Motors, and requested that General Motors produce credible plans, saying that the company's proposals had avoided tough decisions, and that Chapter 11 bankruptcy appeared the most promising way to reduce its debts, by allowing the courts to compel bondholders and trade unions into settlements.[24] GM Chairman and CEO Rick Wagoner was also forced to resign.[25] GM bondholders rejected the government's first offer, but the unions agreed to the preferential terms.[26] A bondholder debt to equity counteroffer was ignored.[27]"

            Your narrative is refuted here:
            http://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization

            Rattner wrote a book about how they did it.

            “In February 2009, with General Motors and Chrysler insolvent, Rattner was appointed counselor and lead auto adviser to the United States Secretary of the Treasury, a role informally referred to in the media as the “car czar”. He soon assembled a team that grew to 14 professionals to address the financial problems of the two auto companies.[1]

            Reporting to both Treasury Secretary Timothy Geithner and Lawrence Summers, the head of the National Economic Council, Rattner’s team developed a plan to save both the two manufacturers and related suppliers and finance companies. The plan involved a total government (i.e., taxpayer) investment of $82 billion in the sector, coupled with controlled bankruptcies for the two auto companies, as well as new management for both, and the closure of 2,000 automobile dealerships and loss of tens of thousands of related jobs.[6][7] Controversially, during the negoitations with the bond holders, Rattner threatened their professional reputations in order to get them on board with the controlled bankruptcies[8]
            Rattner later stated that the toughest decision for President Obama about the two auto companies was whether to save Chrysler. There was, however, no disagreement about asking GM CEO Richard Wagoner to step aside.[9]”
            http://en.wikipedia.org/wiki/Steven_Rattner

          • 0 avatar
            Lie2me

            >>The auto industry bailout was created, formulated, and started by the Bush Administration. The Obama Administration executed the plan.<<

            "You got it all wrong. Bush provided a bridge loan against the wishes of Congress."

            But, but…

            "December 18, 2008: President Bush announced that an "orderly" bankruptcy was one option being considered for both General Motors and Cerberus-owned Chrysler LLC. Sources said that setting up this type of "orderly" bankruptcy would be complicated because it would not only involve talks with the automakers, but also the unions and other stakeholders would have to be involved.

            **December 19, 2008: President Bush approved a bailout plan** and gave General Motors and Chrysler $13.4 billion in financing from TARP (Troubled Assets Relief Program) funds, as well as $4 billion to be "withdrawn later"."

            Your same source

            http://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization

            Nice try, but no

          • 0 avatar
            thornmark

            Not even close.

            The plan that happened was the current admin’s plan. Even you can read that. No but’s.

            It’s all in Rattner’s book. You know, the guy that came up the the plan.

            “Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry Paperback – October 11, 2011”
            http://www.amazon.com/Overhaul-Insiders-Administrations-Emergency-Industry/dp/0547577427/ref=asap_bc?ie=UTF8

          • 0 avatar
            Lie2me

            You were challenging the statement…

            “>>The auto industry bailout was created, formulated, and started by the Bush Administration. The Obama Administration executed the plan.<<"

            By saying…

            "You got it all wrong."

            … but the evidence you refer to supports the statement

            "**December 19, 2008: President Bush approved a bailout plan** "

            It goes on further to say…

            "In September 2008, the Big Three asked for $50 billion to pay for health care expenses and avoid bankruptcy and ensuing layoffs, and Congress worked out a $25 billion loan. By December, President Bush had agreed to an emergency bailout of $17.4 billion to be distributed by the next administration in January and February."

            … and that's exactly what happened.

            Now, granted other stuff happened, but there is nothing wrong with ApaGttH's statement

            So, no

          • 0 avatar
            Pch101

            “No GOP administration would put the UAW ahead of the secured creditors.”

            The GM secureds were paid off in full. If the Republicans had a plan to give them more than that, then that’s one more reason to not vote for them.

  • avatar
    jcjr

    I think that it’s common knowledge that GM knew full well about the ignition issue long before the BK (though some will not want to admit it and will continue lean on the weak crutch of plausible denyability). The real question is if anyone of authority will hold them culpable.

    Perhaps there may be a small splinter of justice to come out of this fiasco, after all.

    • 0 avatar
      Pch101

      Who’s “them”?

      • 0 avatar
        jcjr

        Them is clearly GM.
        There’s no difference between old and new GM, as has been attested to by every major publication since the BK was completed. GM failed to divulge this huge liability and, as such, the terms negotiated during the BK are hopelessly skewed.

        …they should have been liquidated. The worthwhile pieces (including employees with valuable skillsets) would have been bought up (or employed) by truly viable businesses. The rest would be rightfully expunged.

        • 0 avatar
          28-Cars-Later

          I completely agree.

          • 0 avatar
            jcjr

            Thanks 28. It’s good to hear that there are other realists here.

            Odd that pch hasn’t gotten a similar affirmation of his/her high-minded legal assertions. I guess there aren’t many bankruptcy attorneys reading ttac.

          • 0 avatar
            28-Cars-Later

            Its just the truth of the matter, GM got a get out of jail free card and nobody was held accountable. I might feel differently on the subject if upper members of both GM management and upper management of UAW were held accountable in any way because they both failed spectacularly in this instance, but no just like the bankster criminals they all get a free “do over” (till the next time).

          • 0 avatar
            Lie2me

            28, you’re WAY too smart of a guy to put this whole bailout thing into a neat little package that you can publicly flog. You really need to dig into it just to see how massive it was and what the real consequences would have been.

          • 0 avatar
            28-Cars-Later

            The auto bailout was certainly a very complicated issue and something had to give, but even despite everything legal and illegal that did occur for whatever reason, no one was held accountable for the GM bankruptcy (or Chrysler’s). You can blame Rick Wagoner, Bob Lutz, and Bob King all you like but it took many hands and many years to put GM in the position it was in 2008. Why? Why is it the proles are held accountable for their misdeeds but the upper echelon is not? Why did everyone get a pass? Do you know how many inane laws there are along with how many amoral and vicious prosecutors there are in this country?

            Everything aside, the administration should have demanded a slow dearth of resignations from the higher ups at GM and UAW in exchange for their quiet retirements and no prosecution instead of just Wagoner. Slowly new blood could have been brought into the company to replace those who failed from other parts of the industry. Heck the Treasury could have awarded shares as part of an incentive package to entice successful entrants into what would have been very challenging roles. Even the NY Times picked up on the need for new leadership in 2009:

            “Mr. Obama decided that G.M.’s president, Frederick Henderson, should move up to take the chief executive’s job, which has been part of G.M.’s succession plan all along. But how does that represent fresh leadership? And is Mr. Henderson ready? He is known for being more aggressive in his business dealings than Mr. Wagoner was, and speaks the language of Wall Street.”

            http://www.nytimes.com/2009/03/31/opinion/31holstein.html

            But what happened? Oops, hit reset. Just like Wall Street. Our bad guys, just give us a do-over.

        • 0 avatar
          Pch101

          “There’s no difference between old and new GM”

          No, they are completely separate companies. I realize that you don’t understand this, but that’s an indication of your ignorance, not the reality.

          • 0 avatar
            jcjr

            Ah yes. Condescension is a tool used only by the incredibly intelligent. Just ask pch.

            The law says it’s a new company via the miracle of bankruptcy law (*sarcasm off*) but the reality is that it’s the same company with the same assets, same employees, and same leadership operating as if there never was a bankruptcy. They would have us all believe that they are so profitable now due to their incredible business savvy and intellect.

            Sound familiar, pch?

          • 0 avatar
            Pch101

            Of course. Why allow facts to get in the way of a good argument?

  • avatar

    All because they cheaped out on a switch, and then covered it up. Cheaper to pay the personal injury suits for the few folks who figure it out and find a good attorney to prove it in court, and then, if you settle, get a confidentiality agreement and seal the file so the next person has to reinvent the wheel.

    I find especially damning that Cadillac somehow got their own ignition switch shortly after this came to light. Could it be the average income of an SRX buyer is higher than a Cavalier owner, meaning potentially much greater damages in Court ?

  • avatar
    APaGttH

    This whole thing is crap and it reeks of politics. The whole thing going back to 2008 reeks of nothing but politics.

    A long list of other companies that have killed, maimed, and injured far more people, with far more people knowing about the cold hard facts that they were killing, maiming, and injuring people, who got away with after a Chapter 11 bankruptcy after judgment, DIP financing, and transition to the new owners.

    The aggrieved parties got squat, the class action lawyers struck it rich, and the guilty walked away free.

    I have said many times, there is zero defense for GM and the ignition switch fiasco. But given the nature of bankruptcy, GM in principal didn’t have to set up a fund, didn’t have to hire a special administrator, and didn’t have to make per-negotiated payment offers (and by all reports their pretty darn fair). They could have put two middle fingers in the air and said, sorry bankruptcy, not our problem, move on.

    This move to further limit protections has far reaching implications beyond General Motors. If a company that owns the assets of a company that goes bankruptcy is still on the hook for the sins of that company, it will hurt further Chapter 11 filings as DIP financiers, and buyers/raiders won’t want the liability risk.

    Hint if you’re still fuming at GM – had GM gone Chapter 7 guess what – there would be NO ONE to go after at all for this problem. There in lies the future danger for other companies – Chapter 7 destroys jobs, wipes out creditors, and destroys IP.

    Careful for what you wish for…you may not like what happens. The laws of unintended consequences are a real M-Fer

    • 0 avatar
      mkirk

      How many jobs would have been ultimately destroyed? It isn’t like GM’s marketshare would have just evaporated. Someone would have built those cars and while it is likely there would have been some jobs lost I do wonder what the final figure would have been after the dust settled.

      Perhaps the real issue is that many of those manufacturing jobs would have been absorbed by non-union auto makers in red states. Politics and all.

      • 0 avatar
        Pch101

        The economy was on the verge of collapse. If GM had not been bailed out, the capital markets would have shut down, the PBGC would have needed a bailout and we would have probably had a depression.

        The Fed allowed Lehman to fail, and that proved to be a huge mistake. GM finally hit the skids immediately thereafter. It had to be fixed.

        It was all about the timing. If GM had tanked a few years earlier, it would have been allowed to fail and it should have been allowed to fail. But late 2008/ early 2009 was absolutely not the time.

        The GM bailout was cheap compared to the alternative. But you have to grasp how bad that alternative was in order to appreciate it. (25% unemployment and an imploding economy wouldn’t be much fun.)

        • 0 avatar
          APaGttH

          This. And this is what George W. Bush had to say about it.

          It also ignores the fact that just about every OEM on the planet was pleading for GM and Chrysler to be saved. If GM went Chapter 7 it would have killed numerous suppliers taking out JITI operations crippling global auto production.

          Think that is crap? Look at what happened when a couple of key suppliers were taken off line for specific parts after the Japanese earthquake – it created a crisis of production that took some auto makers a full year to recover from.

          Now add that scenario in to the US economy rolling in 20% to 25% unemployment (U3 not U6), in a depression, and then take out Japanese production for a year – you would have had a deeper crisis because there would have been less alternative suppliers.

          I rarely agree with PCH101 but he/she is 100% spot on. Had this happened in 2002, GM would have likely just gone Chapter 11 for starters, because they would have been able to find someone easily to give them DIP financing. The discussion stops there.

          You also forget that the pension liability wouldn’t have gone away – it would have been transferred to you and me, at 40 cents on the dollar – as other companies that have gone bankrupt have done. So the American taxpayer would still have been on the hook for billions to prop up the evil UAW.

          I don’t understand why these basic concepts are so hard for people to understand.

          The issue of Chapter 7 vs Chapter 11 vs a manufactured government managed bankruptcy had zilch to do with GM should die or not. There was no one capable of giving DIP financing in late 2008 even if they wanted to.

          Dispute that? Fine – please list the companies writing DIP financing from September 2008 to June 2009 – oh the Fed doesn’t count.

    • 0 avatar
      Pch101

      It’s not political, it’s monetary.

      The plaintiffs’ rightful claim is against Motors Liquidation aka the Old GM. Which is great, except that the Old GM doesn’t have any money.

      But the New GM does. This is an excuse to ask for money from the deep pocket.

      Oddly enough, the conservatives should be screaming bloody murder about this. It is obvious these claims belong to the old company, and that the tort lawyers are just looking for a payoff. They should get in line with the other creditors, instead of trying to take a bite out of a different company that owes them nothing.

      I feel for the victims, but that’s the risk that one takes when doing business with a company that files BK. A bankruptcy that doesn’t stop creditors claims is not a bankruptcy, so this case is a genuine threat to the integrity of the system.

      • 0 avatar
        CJinSD

        The left loaded up GM like a Pinata with taxpayer loot. Now, they’re using every tool in their arsenal to get the money where they think it belongs, which is in their misanthropic backers’ pockets, be they trial lawyers or Bond villains like Soros or Buffet. The article you refused to read detailed how the same Obama crony that lobbied for GM’s taxpayer funded battle chest balance sheet to be created is the Obama crony that wants a board seat so he can loot it.

        • 0 avatar
          Pch101

          Between the source and your interpretation of it, I’ll just stay ahead of the curve by assuming that this is inaccurate.

          I should probably point out that this is the same duo that claimed that an analyst was 300% accurate (with a straight face) and that published both here and in the WSJ that the GM secured bondholders were crammed down. (They were, in fact, paid off at par. As in 100%.)

          So forgive me if I’m a bit more judicious in my use of sources. I prefer supportable facts to hyperbolic half-truths.

  • avatar
    CJinSD

    Like the unintended consequences of the precedent set by bailouts for badly run enterprises?

  • avatar
    DenverMike

    If a victim was killed from Walmart negligence, except Walmart went through chapter 11 right after the death, it’s still Walmart. I’m not quoting the law, but from a victims standpoint, nothing has changed. Some different shareholders, management, floor people and truck drivers, but Walmart hasn’t gone anywhere. All that stuff changes on a continual basis anyways. Had Walmart been absorbed by Kmart and Walmart disbanded, it’d be a different story. Meaning GM is profiting tremendously by keeping the old name/trademark/legacy alive, vs starting over new as Average Motors for example. Can they have it both ways?

    • 0 avatar
      APaGttH

      The law doesn’t see it that way.

      If Sam’s Club Brand food item of choice sickened 100,000 people tomorrow, and killed 10,000 of them, and Walmart had to file Chapter 11, by the LAW the liability goes away. Now it could be negotiated that the liability would be maintained, it could be negotiated that as part of the bankruptcy certain funds would be set aside to enrich the class action lawyers (sorry, sorry, pay the aggrieved parties).

      Legally, Walmart (old) is the old company and Walmart new (new company) are two completely different legal entities.

      Corporations have personhood – when you go Chapter 11 you “die” but are reborn in a new body with a new soul. When you go Chapter 7 you’re just plain dead.

      • 0 avatar
        CJinSD

        The reason the liability didn’t go away is because GM failed to disclose its existence in settling their existing liabilities. The alternative to carrying over the liability to the new company would be to unravel the entire bankruptcy and liquidate the existing enterprise since it wasn’t created in good faith.

        • 0 avatar
          Pch101

          The liability doesn’t go away. It goes to the old company.

          • 0 avatar
            APaGttH

            This – once again you are correct.

          • 0 avatar
            CJinSD

            It doesn’t get attached to the old company because the time for attaching liabilities to the old company was during bankruptcy, when the current GM management chose to hide the issue. On top of that, “New GM” continued to sell cars with this internally-known defect after bankruptcy. Oops! There goes your entire argument!

          • 0 avatar
            Pch101

            The concept is called “successor liability.” And in almost all instances, there isn’t any in a 363 sale.

            Go back to installing MS Word on PCs or whatever it is that you do.

          • 0 avatar
            greaseyknight

            @Pch101, you must be in the field, the BK field that is. I’m in the consumer side of things, so the 11 stuff is out of my league.

            People don’t get that the idea of Chapter 11 is to keep the company running so creditors get paid something. If GM had totally imploded, the families(and creditors) would be getting pennies from the sale of GM’s assets, instead of actually getting claims paid. Not saying its right to discharge the liability, but thats how Congress wrote the law.

          • 0 avatar
            Pch101

            And add to that that this was a 363 sale, so the buyer of the assets (the New GM) gets them free and clear.

            The assets are sold free-and-clear in order to maximize their sales prices, which produces more cash for the creditors of the bankrupt entity, including those who had crash claims.

            It’s unfortunate that there isn’t enough money for the plaintiffs, but there are very few bankruptcies in which everyone gets to be made whole (otherwise there wouldn’t be much point to having BK in the first place.)

          • 0 avatar
            Lie2me

            CJ, Pch and ApaGtth are right. This has nothing to do with GM per say, but the bankruptcy laws that you’re confusing your love/hate of GM with.

            It’s the LAW that says new GM and old GM are separate entities. It’s not a political thing at all.

            As Pch has stated before this country and most of the world would have been in deep sh1t if the government hadn’t stepped in. You can thank George Bush for the one thing he did right, but if you’d rather hang it on the current administration, I’m sure they’d happily take the credit. Don’t think of GM as some welfare queen that deserves our disdain. The bailout was way bigger then that. If you ever take the time to really dig into it instead of repeating FOX News type sound bites it’s a fascinating story

          • 0 avatar
            CJinSD

            Are you missing the point about the sales of many of these vehicles taking place after the bankruptcy, or are you suggesting that being free and clear from successor liability provides protection from future acts of negligence?

          • 0 avatar
            Pch101

            “Are you missing the point about the sales of many of these vehicles taking place after the bankruptcy”

            You are either very confused or else feeling quite embarrassed about your failures on this thread.

            The whole point of the case is to help those who owned GM vehicles at the time of the BK. Those who bought GM vehicles after the BK are not in the same boat, as they bought their cars from the New GM.

        • 0 avatar
          DenverMike

          The whole thing is shady to say the least. GM swept the deadly defects under the rug for they knew eventually none of it would ever matter. They were going under In a short amount of time or protected by bankruptcy. You can’t keep producing negative millions of dollars a day, for years on end and not expect a “crash”. Pun ABSOLUTELY intended!

          • 0 avatar
            CJinSD

            The government gave them a ‘battle chest’ balance sheet with 39 billion in cash. Now they’re sitting on 25 billion. Who’s to say they ever stopped burning through money?

          • 0 avatar
            APaGttH

            Good luck proving that in a real court and not the court of public opinion.

            But, but, it HAS TO BE TRUE, isn’t the bar set in this country for legal finding – thank God. Otherwise we would still be hanging and pressing to death witches on the flimsy testimony of teenage girls.

            So what proof do you have that the architects of the bankruptcy knew that there was this issue. Also, how can you, with a straight face, ignore any liability to the drivers, who in almost (not all but almost) all of the cases were unseat-belted, speeding, many at night and/or in poor weather, and a significant minority driving impaired. Heck, one of the claimant families their daughter left a suicide note that she was going to kill herself by driving her car into a tree.

            In what sane society are these kind of claims acceptable?

            What, your car loses power and when that happens your power steering firms up so it’s the end of the world? If that’s the bar for suing automakers these days I’m going to drive home every day hoping, PRAYING for the engine to quit while I’m driving and jerk that steering wheel into some solid object as long as I’m going under 40 MPH.

            Profit.

          • 0 avatar
            Pch101

            “They were going under In a short amount of time or protected by bankruptcy.”

            Nobody at GM knew in 2007 when they began to install new ignition switches that GM was going to file bankruptcy in 2009 at the behest of Steven Rattner who would be running an automotive task force that did not yet exist, which was formed by an administration that had not yet been elected, which was led by a president who had not yet been nominated.

          • 0 avatar
            DenverMike

            I’m not saying GM knew Uncle Sam or anyone, anything would rescue their butts. BUT either way, the old GM couldn’t sustain. The end was coming one way or another. Fixing the ignition switch was the equivalent of rearranging deck chairs on the Titanic. GM was taking on water like a motherfukker.

          • 0 avatar
            Pch101

            “So what proof do you have that the architects of the bankruptcy knew that there was this issue.”

            He doesn’t have any.

            Facts are annoying, but here is another one: In 2007, NHTSA’s ODI unit reviewed the airbag deployments and decided not to investigate further. You may notice that this was more than a year prior to the BK, during the Bush administration.

            What complicated this issue is that a lot of the drivers were at fault for the crashes. That encouraged GM and NHTSA to avoid doing more than they did. Their response may have been inappropriate, but it may have been understandable given the circumstances.

            NHTSA is more aggressive these days, including much higher fines than there used to be. This may have been handled differently if Obama had been president in 2007.

          • 0 avatar
            DenverMike

            Old GM executives aren’t getting tried for manslaughter. It would be a civil case. So it would come down to what’s more likely than not, circumstantial evidence, etc, not “beyond a reasonable doubt”.

            And it may just be most American drivers are incompetent fools, drunk behind the wheel, on a suicide mission, or all of the above. That still doesn’t make it right to knowingly or unknowingly, make a drive to wherever more hazardous and deadly than it already is.

          • 0 avatar
            Pch101

            I don’t think that anyone is arguing in favor of bad ignitions. So I’m not sure what you want exactly.

          • 0 avatar
            DenverMike

            No doubt victims that were drunk with bad GM switches, should get reduced payouts. Good.

            And NHTSA wasn’t what it is today. Alright.

            BK architects knew zero about bad, deadly ignition switches. Fine too.

            But how does that make it OK to build cars with deadly defects, known to kill stone-cold sober drivers just the same?

          • 0 avatar
            Pch101

            The New GM doesn’t owe them anything.

            The Old GM has essentially no money.

            Where is this money supposed to come from exactly? Are you going to donate?

          • 0 avatar
            DenverMike

            Does the old GM even exist somewhere? It was never a question which “GM” should pay victims. The new GM wants to keep everything good about the old GM going, but not the bad. Sorta convenient.

          • 0 avatar
            Pch101

            If you knew what bankruptcy does, then you’d understand this.

            To be fair, this may have been less confusing to some of the non-business and non-legal types out there if the new company had chosen a different name.

            Perhaps they should have called it Global Motors or something, so that they could have kept the GM initials but you would be able to understand that it’s a new, different company that has no financial obligations to the now-dead old GM. Perhaps a new GM logo to go along with it would have also helped.

          • 0 avatar
            DenverMike

            Sure but should a federal judge decide General Motors acted in the wrong during bankruptcy proceedings, the automaker may see its protections considerably narrowed.

            According to Reuters, the point of contention is whether or not GM purposely hid the defects linked…

            Did you even bother reading the above article?

          • 0 avatar
            Pch101

            I suppose that you guys don’t understand the legal process, either.

            Lawyers on both sides make arguments — that’s their job. But there are many instances when one side simply has more solid arguments than the other, and the one side with the weaker case will eventually lose.

            The plaintiffs lawyers stand to gain nothing if they sue the Old GM. So naturally, they will sue the New GM. They will use whatever arguments that they can, but that doesn’t mean that the arguments are worth a damn. But the judges will let them present the arguments, anyway, before throwing them out at a later date.

            The plaintiffs are probably also in this in order to induce a settlement. They are probably hoping that the bad PR will encourage the New GM to write some checks, even though they are not legally obligated to do so.

            What we do know is that suing the Old GM can at best produce a Pyhrric victory because it has no money. This is all about trying to pry open the multi-billion dollar deep pocket.

          • 0 avatar
            APaGttH

            How did Toyota get away with ill-designed floor mats combined with gas pedals with inadequate clearance?

            How has Honda gotten away with putting Claymore anti-personnel mines in the steering wheels and dashboards of their products and call them airbags?

            How did Ford build for over a decade 10 million plus vehicles with bad cruise control relays that burned, cars, garages,homes, and home occupants alive?

            Crap happens, and GM doesn’t hold the exclusive rights to ignoring known design flaws and tap dancing around doing the right thing.

            Honda and Takata if anything are vastly worse than GM or Toyota in this matter.

          • 0 avatar
            Pch101

            I’m pretty sure that TMC didn’t instruct its dealers to install Lexus SUV floor mats in a Lexus ES.

            You should read the government investigation of the Mark Saylor crash. It probably doesn’t say what you think that it does.

  • avatar
    DeadWeight

    Bankruptcy petition filings, and subsequent BK discharges, do not cover what are tantamount to “frauds on the court,” at the VERY LEAST WHICH EXTEND TO THIS SPECIFIC ISSUES & SUCH LACK OF DISCLOSURES/CONCEALMENT FROM THE BANKRUPTCY COURT.

    Pch101’s consistent insinuation, if not outright assertion, that it should or does is bewildering. We’ve been down this road before:

    My prior statement: https://www.thetruthaboutcars.com/2014/03/congressional-hearings-loom-as-switch-swap-raises-questions-at-gm/

    “There are credible claims at this point that GM committed fraud on the bankruptcy court by inaccurately stating its present & potential liabilities to the court, which, if true, would negate the filing of the bankruptcy petition and court order authorizing bankruptcy protection previously extended.”

    https://www.thetruthaboutcars.com/2014/03/congressional-hearings-loom-as-switch-swap-raises-questions-at-gm/

    ““Former GM engineers say quiet ’06 redesign of faulty ignition switch was a major violation of protocol”

    “Not assigning the new part number would have been highly unusual, according to three people who worked as high-level GM engineers at the time. None of the engineers was involved in the handling of the ignition switch; all asked that their names not be used because of the sensitivity of the matter.

    “Changing the fit, form or function of a part without making a part number change is a “cardinal sin,” said one of the engineers. “It would have been an extraordinary violation of internal processes.”

    http://www.autonews.com/article/20140324/OEM11/303249959/former-gm-engineers-say-quiet-06-redesign-of-faulty-ignition-switch

    “GM’s knowledge of the defective component — and its subsequent silence — may also claim Delphi under the wave of red flags the automaker ignored at its peril. Automotive News says the litigation protection established for the supplier during its Chapter 11 bankruptcy process could fall if Delphi was found to have committed fraud by not disclosing their part in the ignition defect during proceedings.

    Within the Renaissance Center, USA Today says GM learned in 2007 of a 2005 fatality when a Maryland teen, Amber Marie Rose, lost control of her Cobalt and crashed into a tree while intoxicated. The report noted the airbags had not gone off as intended, with the cause linked to the switch set to “accessory” instead of “on.”

    Meanwhile, Automotive News reports the in-house-designed switch — the result of the automaker wanting to do more on its own amid rising warranty costs in the mid-1990s — didn’t meet the specs required of it until its redesign in 2006, nine years after engineers were asked to design the part. However, the improved part retained its old part number when former GM engineers claim it shouldn’t have, while GM remained quiet on the matter until 2013 when a wrongful death lawsuit from Georgia started the ball rolling on the issue.”

    • 0 avatar
      Pch101

      You ought to know better than to be suckered by your own BS. If you are going to use hyperbole as part of your routine, then you also need to know to not actually believe any of it.

      There’s no fraud here. You probably ought to look up what that means in a legal dictionary before using it in this context. (Hint: Fraud in a legal sense is far more specific that what you think it is, it is very hard to prove, and it is not applicable here.)

  • avatar
    ktm

    As PCH and APaGttH have been saying, new GM is not liable for cars sold by old GM. Lie2Me made the point I am reaffirming, the LAW is the issue, not new GM.

    Is it “morally” wrong that new GM can wash their hands of this liability that has killed people? Yes. Is it legal? Yes. The way the BK laws are structured the new GM is not liable for the wrong-doings of the old GM.

    Saying that, as a licensed civil engineer, I firmly believe that all engineers should be licensed. According to the law, I am PERSONALLY liable for my professional acts.

    Read this scary bit: http://cenews.com/article/8307/facts-of-civil-engineering-life

    Why should other engineers who design systems that can kill people get a pass? Point is, they shouldn’t. The victims would have recourse in this matter if they had similar licensure requirements.

    However, blame the law again as they are usually exempt if it runs afoul of the interstate commerce laws.

    • 0 avatar
      Pch101

      To clarify that point, (the New) GM agreed to assume liability for pre-BK cars for incidents that occurred since the bankruptcy. (This was part of the purchase and sale agreement.)

      That means the New GM is on the hook for warranty work, recall repairs and liability for crashes that occurred since the bankruptcy.

      What the New GM is not responsible for are crashes that took place before the BK. There have been some ignition-related crashes since the Chapter 11 was completed that involve cars built by the Old GM, and the New GM does have to deal with those. The government negotiated for that as part of the reorganization.

  • avatar
    star_gazer

    @Pch101

    I disagree with you on two points:

    1. The separation of Old GM and New GM is contingent on liability disclosure. If upper management knew of malfeasance, the terms of the bankruptcy may be under review. That is what Judge Gerber will determine.

    2. You have indicated that there is no fraud; I think there is evidence. GM dictates that a part number change is warranted if the form, fit or function of a part is change. This is not GM’s philosophy as much as their religion.

    We have a difference of opinions. I don’t think our opinions matter as much as Judge Gerber’s ruling.
    -Stargazer

    • 0 avatar
      Pch101

      You guys need to learn what a 363 sale is.

      Perhaps an example would help: Let’s suppose that Dave Default files for bankruptcy.

      The trustee’s job is to sell Dave’s assets in order to pay Dave’s creditors. The trustee sells the assets free and clear because that maximizes the price, which is good for the creditors.

      Nick Newmoney buys Dave’s assets. Nick buys those assets free and clear — whatever happened prior to the BK is not Nick’s problem.

      A couple of years pass and it turns out that Dave didn’t include one creditor on his list of creditors. (We’ll call her Sally Shafted.)

      What does this mean for Nick? Nothing. He bought the assets free and clear. This problem remains Dave’s problem.

      Sally has no claim against Nick. Her problem is with Dave and the other creditors who presumably got some of what should have been her money.

      There is no reason for Nick to pony up anything more in this situation. He bought some stuff from Dave without strings attached. That was by design — the court structured it this way on purpose in order to get Nick to pay as much as possible; if there has been strings attached, then Nick would have paid a lower price, which would have left even less money in the pot for the creditors.

  • avatar
    star_gazer

    @Pch101-

    You are missing my point. A rule of law (i.e. a 363 sale) is not a law of nature. It can be changed. Perhaps I can illustrate with an example.

    Say that I was an engineer for Delphi (which I was). I spin electrons for a living. The fruits of my labors can be checked and verified. Solutions to problems are always in the back of the book.

    Now, Delphi goes bankrupt. Not world-wide, mind you, but just in the US. Pensions are frozen and sent to the PBGC, but only for the salary workers. Also, salary workers are not allowed to transfer to GM plants but hourly workers have that right.

    Who made these decisions? The politicians and the courts. Unlike the laws of physics, the rule of law is fungible. As an engineer down here looking up, the decisions seem to me biased. But again, this is my opinion.

    Judge Gerber may rule that Dave Default just changed his name to Nick Newmoney and that the new boss is the same as the old boss. Judge Gerber may suspend the 363 guidelines and change Nick Newmoney’s name into Nick Shafted.

    Now, if you’ll excuse me, I have some engineerin’ to do. Before I go, I want to give a shoutout to Mikey in Canada. Mikey, I’m busting my hump to keep you in the retirement lifestyle that you are accustom to. Give that Impala another coat of wax for me!

    -Stargazer

  • avatar
    stanczyk

    Old GM ‘CEO’s’ should pay for their decisions .. that now make so much trouble ..
    They’ve got their bonuses for ruining GM , .. so lets now charge them for that ! ..

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