Saturday, June 27, 2009

New GM Agrees to Assume Future Product Liability Claims

by Calculated Risk on 6/27/2009 07:58:00 PM

From the WSJ: GM to Take on Future Product-Liability Claims (ht sportsfan, Basel Too)

General Motors Corp ... has agreed to assume legal responsibility for injuries drivers suffer from vehicle defects after the auto maker emerges from bankruptcy protection.
...
Under GM's original bankruptcy plan, the auto maker planned to leave such liabilities behind after selling its "good" assets to a "New GM" owned by the government. That meant future GM car-accident victims who believed faulty manufacturing caused their injuries would be unable to sue the New GM. Instead, they would have been treated as unsecured creditors, fighting over the remains of GM's old bankruptcy estate.

GM's move to take responsibility for future product-liability claims, outlined in a court filing late Friday evening, represents a partial victory for more than a dozen state attorneys general and several consumer advocacy groups.
...
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. 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.
This agreement doesn't cover current product liability plaintiffs - this just appears to cover future car-accident victims.