Judge's Ruling Regarding General Motors 2009 Bankruptcy To Impact Ignition Switch Cases

An April 15 ruling by a federal bankruptcy judge clarifies the impact of General Motors’ 2009 bankruptcy proceedings upon legal claims pertaining to faulty ignition switches. Details of the Ruling Judge Frank Gerber, of the U.S. Bankruptcy Court in Manhattan, was responsible for the ruling. He also presided over GM’s bankruptcy proceeding in 2009. Essentially, the ruling absolves the “new GM” from financial responsibility for misconduct by the “old GM.” In the judge’s 138-page opinion, he states that at least 24 people at General Motors knew of the ignition switch problem before the bankruptcy proceeding. However, the judge also rules that the company’s bankruptcy attorneys had no knowledge of the information that these individuals possessed. Impact on Claimants The ruling will affect two groups of potential claimants. First, those that were seeking compensation for injury or death allegedly caused by ignition switch failures before the date of the bankruptcy. Such individuals cannot sue GM as a result of this ruling. One of the plaintiff’s attorneys estimates that the judge’s decision may shield General Motors from potential liabilities of $7 billion to $10 billion. Plaintiffs’ attorneys argue that, because GM concealed information about defective ignition switches, plaintiffs had no opportunity to dispute the bankruptcy proceedings. Opponents plan to appeal. Importantly, the ruling does not impact anyone injured or killed in crashes occurring after the GM bankruptcy proceedings. Second, those that seek compensation for decreased vehicle value due to the ignition switch controversy. The ruling does clear the way for the owners of such vehicles to seek compensation. GM’s $400 Million Fund The ruling does not affect the fund that GM created to compensate injured victims. General Motors has created a $400 million fund to compensate those injured, or survivors of those killed, due to ignition switch failure, regardless of when the crashes happened. GM’s attorney, Kenneth Feinberg, has thus far identified 84 fatalities and 157 injuries related to ignition switch problems, and he says that compensation is appropriate in the cases identified thus far, regardless of when those accidents occurred. Certain survivors of those killed have accepted offers of more than $1 million in each case, according to the New York Times. Our firm tracks bankruptcy law developments that impact our clients. To learn more about our services, please contact us.