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GM's Bankruptcy Appeal Marching Forward in U.S. Supreme Court

Wednesday, April 19, 2017By Richard Alexander

The U.S. Supreme Court will soon decide the extent to which GM will be held liable for deaths and injuries caused by its faulty ignition switches. The company had appealed a decision by the Second Circuit of Appeals that would allow GM to be held accountable for more accidents than had been previously thought.

Under the bankruptcy sale that allowed GM to survive as a viable automaker, New GM obtained the assets of Old GM, but not its liabilities unless provided for in the approved bankruptcy sale. While New GM agreed to satisfy claims for accidents involving Old GM manufactured cars that occurred after the sale, it did not agree to satisfy claims filed after the sale that arose from accidents that occurred before the sale.

At issue is whether persons with potential claims from accidents before the sale of the company, but who had not filed claims, had had their rights to due process violated. The Second Circuit said that their rights had been violated and, therefore, they had the right to press claims against New GM.

Before a bankruptcy sale takes place, the bankrupt entity must first disclose all liabilities, and the creditors must be notified of the terms of the pending sale and allowed an opportunity to weigh in on its terms. In this case, people who had been involved in crashes that may have been caused by the faulty ignition switches were not notified. At the time of the sale, the crash victims would not have been aware of the defective switches because, despite knowing of the problem as early as 2001, GM did not recall the affected cars until 2014.

New GM contends that it cannot be held liable because the potential claims were not disclosed by Old GM. The plaintiffs in the case argue that New GM is essentially Old GM, pointing to the overlap of people in charge both before and after the bankruptcy sale, as well as use of the same corporate facilities. Thus the liabilities of old GM should be the liabilities of New GM.

If you were injured in an accident before 2009 that involved one of the recalled cars, you may still be able to bring a claim. Contact the Alexander Law Group, LLP online, or call 888.777.1776. We’ll fight for you to receive your day in court.

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