Where there once was Chrysler and General Motors, there is now “Old Chrysler” and “New Chrysler,” “Old GM” and “New GM.” The “new” companies will be liable to consumers under the same regulations that govern all auto manufactures in the United States. While the new companies will be held liable to consumers under the same laws that govern all automobile manufacturers in the United States, the old companies may, by virtue of their bankruptcy settlements, escape liability for injuries sustained by thousands of Americans. And although GM has assumed a great deal more responsibility than Chrysler, the extent of GM’s liability has yet to be finally determined.
Terms of the Bankruptcies
When GM and Chrysler began restructuring, they faced difficult questions about the likelihood of company survival. Chrysler spokesperson Mike Palese insisted that avoiding significant liability was key to the company’s future viability. Chrysler was thus granted immunity from any future liability actions (with the exception of “lemon law” claims filed prior to the bankruptcy) concerning accidents involving cars built before it filed for bankruptcy. Therefore, Chrysler cannot be sued for accidents involving any of its cars built before April 2009. It remains to be seen if Chrysler’s lack of responsibility will create enough animosity among consumers that shirking liability will ultimately endanger the new company’s success.
New GM, like new Chrysler, will not be held liable for any claims filed against GM before it filed for bankruptcy. People who won suits against GM or filed claims against the company prior to June 1, 2009 can only hold “Old GM” liable. As “Old GM” will soon lack meaningful assets, it is likely that those who filed suit with GM prior to the bankruptcy will not be able to recover the damages they are owed.
Approximately 300 Americans have been left without meaningful remedy by GM’s bankruptcy settlement. The Ad Hoc Committee of Consumer Victims of General Motors, a group of attorneys who represent the 300 Americans who filed lawsuits against GM prior to the bankruptcy, values these claims at over $1.25 billion dollars. Many of their clients have suffered devastating injuries from alleged vehicle defects including paralysis and brain damage. Under the GM restructuring, these defective product claims must be paid like unsecured creditor debt – that is, out of old GM’s virtually worthless assets.
It is unclear at this time what recourse the 300 Americans who filed defective product claims against GM before the bankruptcy might have against new and old GM. Several victims of claims filed against GM before its bankruptcy may still have the chance to be heard. Several individual defective product lawyers have filed an appeal before the United States Bankruptcy Court in the Southern District of New York, objecting to the restructuring of the GM Corporation in bankruptcy.
Until the appeal is completed, it will be the responsibility of the public to inform lawmakers as to whether it is acceptable in their opinions for consumer rights and protections to be sacrificed in the name of protecting the future economic interests of big business.