Federal Court Lifts GM Bankruptcy Protection from Ignition Switch Injury and Death Claims

by San Antonio Attorney

General Motors’ bankruptcy case in 2009 cannot save it from any legal actions over a hazardous ignition-switch failure that resulted in criminal charges against the company and caused the GM’s recall of 2.6 million automobiles in 2014, according to a ruling of the federal appeals court on July 13, 2016.

An appeals court in Manhattan said plaintiffs are allowed to sue GM over vehicular crashes and damage to the automobiles’ value caused by the defective switch.  According to the court, preventing the people from taking legal action would infringe their rights to a fair treatment through the normal judicial process.  This is due to the fact that they had not been informed about the defect before the bankruptcy case was filed.

The court’s decision limits GM’s efforts to stop many consumer lawsuits over defective ignition switches, and other auto components, for the reason that they were prevented by automatic stay in its 2009 bankruptcy.

The court added that even in times of crisis, the due process should be applied.

The decision has an effect on some death and injuries before GM’s bankruptcy, as said by a legal representative for those claimants, Robert Hilliard.  Moreover, it is significant for the consumers who are claiming that the value of their GM automobiles has diminished because of the safety issue.  It has been estimated that they are worth as high as $10 billion.

In 2015, former Bankruptcy Judge Robert Gerber ruled that the restructured GM was protected from legal responsibility over the old pre-bankruptcy actions of GM, but he permitted some individual claims founded only on the restructured GM’s demeanor to carry on.

The attorneys of affected customers are arguing that GM should still be liable because it covered up the switch problem for over a decade.

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