GM Asks Bankruptcy Court To Block Ignition-Related Lawsuits

A few weeks back, new General Motors CEO Mary Barra hedged on whether her company would hide behind the shield of its 2009 bankruptcy in order to block lawsuits tied to the ongoing ignition-related recalls, telling lawmakers only that “we have civic responsibilities as well as legal responsibilities.” In the weeks since, GM has made it very clear that it will do everything it can to use its own financial incompetence and ineptitude to put up a wall against these lawsuits.

As we’ve explained before, when GM went belly-up during the recession its restructuring plan included selling its assets to a new corporate entity called NGMCO Inc. — the “new” GM corporation — which then changed its name to “General Motors” and kept all of GM’s brands, logos, and trademarks… but without many of the liabilities of the “old” GM.

And even though the recall did not occur until 2014, the defective part itself was fixed before the bankruptcy. So while GM is going to fix all those defective Chevy Cobalts, Saturn Ions, and other vehicles, it maintains that it can’t be held liable in the class action suits being filed over the defect.

GM has already filed motions in two federal courts seeking stays against the suits, hoping to pause them from moving forward while waiting for a judicial panel to decide whether to consolidate the cases and where a consolidated case would be heard.

But today’s filing with a federal bankruptcy court in New York seeks to stall these cases out, much like a 2005 Chevy Cobalt could be stalled out if you bump your knee against the ignition.

“New GM’s recall covenant does not create a basis for the plaintiffs to sue new GM for economic damages relating to a vehicle or part sold by old GM,” reads the car maker’s filing, which asks the court to dismiss claims already made and prevent future claims from being filed.

These lawsuits involve allegations of fraud and cover-ups at the car maker, which knew about the defect as far back as 2001 and didn’t do anything about it until 2007, and still continued to hold off on a recall through early 2014, while at least 13 people died in accidents tied to the defect.

Thanks to the forward-thinking objections of various attorneys general at the time, the GM restructuring does not shield the car company from liability related to accidents in vehicles made before 2009.

So now it’s up to the courts to decide whether GM’s liability ended with the emergence of the new GM, or whether the new GM’s delay in issuing the recall will mean it is also liable for continuing to allow these vehicles to be on the road with a defective part.

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  1. CommonC3nts says:

    It does not make sense to make a new company pay for liabilities of a bankrupt company just because they now have the same name and acquired some of the old companies assets.
    Whoever is suing the new GM (NGMCO corp) is suing the wrong company.

  2. Instegone says:

    This is why I hate how bankruptcy works in the US. Basically a company can screw over customers and investors, file for Bankruptcy and then act like nothing ever happened.