Court rules GM shielded from death claims before bankruptcy
Bankruptcy Law
A federal judge ruled Wednesday that a 2009 bankruptcy order shields General Motors from billions of dollars in death and injury claims tied to defective ignition switches in older small cars.
But Judge Robert Gerber in New York, who handled GM's government-funded bankruptcy case six years ago, also ruled that plaintiffs who claim a loss in the value of their cars can still sue General Motors Co., but only for company actions that happened after it left bankruptcy in July of 2009.
The ruling is at least a partial victory for GM, with one plaintiffs' attorney saying it shields the company from $7 billion to $10 billion in potential legal liabilities. But it also leaves open the possibility of costly claims for decreased values of cars.
In 2009, Gerber allowed "new GM" to emerge from bankruptcy protection free from liabilities of the company before bankruptcy. But the plaintiffs recently argued that GM misled the court six years ago because it knew about but failed to disclose the ignition switch problem. The switches, which can slip out of the run position and cause cars to stall unexpectedly, are now linked to at least 84 deaths.
Lawyers for plaintiffs in more than 140 lawsuits had argued that their clients never got a chance to dispute the bankruptcy order and were never notified of the bankruptcy because GM concealed the defective switches.
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