GM Bankruptcy Amended to Address Some Concerns

By Dean I Weitzman, Esq. on June 30th, 2009

Since the announcement of Chrysler’s bankruptcy plan nearly a month ago, opponents have gathered to express outrage at the injustice of this plan. As we discussed previously, the Chrysler bankruptcy plan leaves people who are injured as the result of defective Chrysler vehicles without legal claims against the “new” emerging company.

This outrage did little to alter the fate of Chrysler; the bankruptcy was approved with minimal interruptions. Chrysler has emerged from bankruptcy without liability for product defect clams. However, this outrage has made a difference.

Originally GM was expected to follow the path forged by Chrysler, eliminating all responsibility for product liability claims as part of the bankruptcy settlement. In the initial bankruptcy filing, the company proposed precisely this course of action.

Under pressure from state attorneys general, consumer groups, and injured victims though, GM has reconsidered. According to recently filed court documents, “new GM” will honor product liability claims arising after the company emerges from bankruptcy.

This is certainly a step in the right direction. When a company’s negligence results in injuries, the injured people should not be left alone to face the consequences. However, this is only a partial solution. The amendments do nothing to change the effects of the proposed bankruptcy on people with existing product liability claims. Even with this amended plan, several hundred individuals with catastrophic injuries caused by the negligence of GM will have nowhere to turn.

With this amendment it seems quite likely that GM will be able to emerge quickly from bankruptcy. The amendments have placated many of the most vocal critics, who are willing to compromise as a matter of practicality. Unfortunately,  this will leave already-injured victims among those shouldering the burden of the bankruptcy.