General Motors Saved From Pre-Bankruptcy Ignition Lawsuits

Cameron Aubernon
by Cameron Aubernon

Per a bankruptcy court ruling Wednesday, General Motors won’t be on the hook for pre-bankruptcy claims linked to the February 2014 ignition recall.

Reuters reports U.S. Bankruptcy Court Judge Robert Gerber ruled that plaintiffs seeking damages from GM involving claims made prior to the automaker’s 2009 exit from bankruptcy would have to sue “Old GM” for said damages. Though the claims come to $32 billion, Old GM’s assets in October 2014 totaled around $9.25 billion, a recovery of 29 cents on the dollar.

Gerber added that economic-loss plaintiffs could bring their claims against “New GM” based on the automaker’s behavior since leaving bankruptcy, and would certify the case for direct review by the 2nd U.S. Circuit Court of Appeals. He also said there were due process failures involved in GM’s exit, but that those failures weren’t enough to become violation-level issues due to lack of evidence by plaintiffs demonstrating that they were denied their day in court because they did not receive notice in time.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • VenomV12 VenomV12 on Apr 16, 2015

    If you despised GM because they were bailed out before, this sure won't go a long way towards helping change that opinion of them. You can argue the legality of this and whether you think it was right or wrong, but what is important is public perception and how that will affect sales.

  • Whittaker Whittaker on Apr 16, 2015

    For those who are claiming the bankruptcy was "normal" please explain how it is normal for new GM to be allowed to lessen their taxes by claiming the losses of old GM as their own. Aren't they different companies? Since when can one company avoid taxes by writing off the losses of a different company. The fact is, the judge is allowing new GM to claim the assets(tax write-offs) that strictly belong to old GM. These assets weren't purchased. They were awarded to new GM by the court and it came out of all of our pockets through taxes not paid by new GM. Whether or not you agree with the logic behind the judge's decisions, they were anything but normal. It was political contortion masquerading as law.

    • See 3 previous
    • Whittaker Whittaker on Apr 17, 2015

      @Pch101 It is a fact that GM got special treatment in the bankruptcy and the bailout. That is not in dispute by anyone that knows what they are talking about. You can argue that the special treatment was needed for the good of the country but that would be an opinion. We can't know what would have happened if GM had been treated as a normal failed business because that is a hypothetical. You are entitled to your opinion. You are not entitled to keep claiming as fact that the GM failure was handled just like any other business failure by the US Government which includes the judge, the Congress, the President and the IRS. The US Government decided that GM had to continue mostly intact and the various branches of the Govt twisted law and policy to make it happen.

  • CoastieLenn CoastieLenn on Apr 17, 2015

    I always associated the term "bankruptcy" as a huge black smudge with long lasting side effects for any individual that claims it. How exactly has this "bankruptcy" had any long-term ill effects on GM? I know that these proceedings were undertaken so that the company could be bailed out (on surface value a terrible idea), but what's punitive side of this? Sure, GM had to pay back the Government a percentage of what it actually cost us taxpayers, but what's the downfall here? What actions or penalties have been put in place that ensure that GM learns from it's mistakes, so to speak? Clearly the company wouldn't have needed a bailout or filed for bankruptcy if it were not being mismanaged. What's to stop us (being the taxpayer that may or may-not want to even be supporting this company) from future gross negligence leading to yet another bail out? Obviously our leaders feel that if GM fails, the country won't manage to pick up the peices so it seems that this could easily happen yet again. Then what?

    • See 3 previous
    • Pch101 Pch101 on Apr 17, 2015

      @CoastieLenn Aside from your desire to complain, I have no idea what you want. We bailed out GM as part of a larger effort to avoid a depression that would have made the 1930s look like a picnic. GM was not bailed out because we love the Ren Cen or Malibus or due to nostalgia. If GM failed this afternoon, it would have still been worth it. The world was on the verge of collapse in 2009, and keeping GM afloat was one of many things that were done in order to keep things from imploding completely. I have no love for GM cars personally, and I wouldn't care less if it liquidated just so long as the timing wasn't as bad as it would have been six years ago.

  • ClientNo9 ClientNo9 on Apr 17, 2015

    The untold story of the bankruptcy is that people in the defense department were also lobbying for a bailout. If we should have another world war, they were afraid of losing GM's production capacity. So don't complain too much. Keeping GM alive also supports our national defense.