Is GM Trying to Hide Behind Bankruptcy?

With a recent motion in a Corpus Christi, Texas federal court case, General Motors (GM) is attempting to limit its legal liability in this and other cases across the country involving defective ignition switches. On April 15, 2014, GM filed the motion, noting that it will soon request a federal bankruptcy judge in New York to shield the company from legal claims for incidents that took place before its bankruptcy in 2009.

The defective ignition switches, which can without warning slip out of the “run” position, shutting down the engine, knocking out power-assisted steering and power brakes, and disabling air bags, have resulted in GM recalling 2.6 million cars. According to GM, at least 13 deaths linked to the switch issue have occurred. The company has admitted that it has had knowledge of the problem for at least 10 years; however, it didn’t start recalling the cars until February 2014.

GM wants to postpone action on the lawsuit until the bankruptcy court rules, and other federal courts make a decision on whether or not to combine the case with other lawsuits. Its motion states that it will ask the bankruptcy court to enforce an order that divided GM into new and old companies, which was made during the 2009 bankruptcy case. According to the order, claims from prior to the bankruptcy would be categorized to “Old GM,” named Motors Liquidation Co., while claims made post-bankruptcy would be categorized to the new General Motors Co. The motion says that more than 30 cases have been filed against GM since February 2014.

But, GM is stating that it is not requesting to stop action on a motion to force it to tell customers to not drive cars that are being recalled. It is also exploring ways to compensate families of crash victims.

Is GM trying to hide behind the bankruptcy? While the company has said customers can keep safely driving their cars if the proper precautions are taken, what could happen with the ignition switches?

If you have legal questions about your GM vehicle, the attorneys at Pike & Lustig, LLP-TURNPIKE LAW® can help. For more information, call 561-291-8298 or visit www.turnpikelaw.com.