General Motors made it clear several months ago that it would use its ignition switch defect recall2009 bankruptcy to shield itself from liability in lawsuits regarding the now massive ignition switch defect recall. Yesterday the carmaker reiterated its stance that it can’t be held responsible for the bad behavior of the “Old GM.”
Reuters reports the company, which faces 130 lawsuits over accidents and lost vehicle value related to the recall, filed a brief saying that plaintiffs in the cases were trying to re-litigate issues that had been aired and resolved five years ago during the company’s bankruptcy hearing.
“Plaintiffs resurrect the same failed arguments as the creditors before them made in seeking payments from New GM for Old GM’s liabilities,” the brief said.
GM’s argument hinges on its belief that when it filed for bankruptcy during the recession its restructuring plan – which included selling its assets, brands, logos, and trademarks to a new corporate entity called NGMCO Inc. (now known as “General Motors”) – absolved it from many of the liabilities of the “old” GM.
Even though the recall did not occur until 2014, the defective part itself was fixed before the bankruptcy. So while GM is going to fix all those defective vehicles, it maintains that it can’t be held liable in the class action suits being filed over the defect.
Many of the lawsuits filed against GM include allegations of fraud and cover-ups at the car maker, which knew about the defect as far back as 2001 and didn’t do anything about it until 2007, and still continued to hold off on a recall through early 2014.
Back in April, GM asked the federal bankruptcy court to prevent cases related to vehicles made before 2009 from going forward, based on its belief that terms of the sale of the older vehicles put liability squarely on “old” GM.
However, plaintiffs’ lawyers have asked the court to rule that the bankruptcy doesn’t protect the company because consumers were not informed about the problems at the time and had no chance to argue during the bankruptcy proceedings.
Just two months ago, plaintiffs in cases against GM received a boost in their fight when a federal judge directed GM to turn over all documentation, including information already submitted to Congress and an internal investigation. However, the order only pertained to accidents that occurred after the automaker became the “new” GM.
In Wednesday’s brief, GM rejected the argument that plaintiffs’ didn’t have notice of the bankruptcy sale and stressed that none of its action constitute fraud against the bankruptcy court, Reuters reports.
A spokesperson with GM says the company believes its position is consistent with federal law and legal precedent.
The lead lawyer for the plaintiffs tells Reuters he was expecting the new filing.
“I say bring it, we will beat it,” he says.
GM tells court it not liable for claims over pre-bankruptcy cars [Reuters]
by Ashlee Kieler via Consumerist
