Remember all of those protections sought by General Motors during its bankruptcy proceedings made against any and all future lawsuits linked to ignition-related accidents and fatalities that occurred prior to the automaker’s exit from said proceedings in July 2009? Guess how much it would owe if the shield collapsed?
Bloomberg reports GM could be on the hook for as much as $2 billion if federal bankruptcy judge Robert Gerber of Manhattan rules in favor of the plaintiffs of a class action aimed at bringing said shield down.
The suit calls for damages to be paid due to lost resale value as a result of the February 2014 ignition switch recall, citing alleged fraud committed by the company during the proceedings, claiming executives knew of the issues affecting a handful of models made between 2003 and 2011. Bankruptcy attorney Chip Bowles explains:
In bankruptcy, you have to disclose your assets and liabilities. Those are basic requirements — and GM didn’t do it. It would be very easy for Gerber to say, “Guess what? If you know someone is a creditor you have to give them notice. If you fail to do so, they aren’t constitutionally bound by my orders.”
The collapse would only be the beginning: Aside from the 2.2 million vehicles that could be affected, another 9.6 million vehicles suffering similar ignition woes — 90 percent of which were made prior to the July 2009 reorganization — would likely see their owners wanting a part of GM.
A ruling could be made as early as late February of 2015.
The post General Motors Stand To Lose $2B If Bankruptcy Protections Were Lost appeared first on The Truth About Cars.
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