GM Asks U.S. Supreme Court to Overturn Court of Appeals Ruling on Bankruptcy Shield

by San Antonio Attorney

General Motors Co. announced on Dec. 13 that it has requested the United States Supreme Court to overturn a Second U.S.  Circuit Court of Appeals ruling that has exposed the automaker to future billions of dollars in legal actions arising from pre-bankruptcy claims of faulty ignition switches.

In 2009, the company accepted some liabilities as it came out as a new GM after completing its bankruptcy reorganization, but gained protection against certain liabilities that it would have been faced by the old GM.  That is called as bankruptcy shield.

The new company accepted certain liabilities for claims connected to the accidents happening only after it transformed as a new GM, albeit the vehicles were made prior to that.

Many injury, economic loss and wrongful death lawsuits have been filed against the company over its defective ignition switches and issued a recall of almost 2.6 million older automobiles in 2014.  The company has admitted it was aware of the issue for years but the cars were not recalled until many years have passed.  For that reason, GM was fined by the Department of Justice and National Highway Traffic Safety Administration.

The defective auto part ultimately was linked to 124 deaths and many injuries.

Un 2016, the federal appeals court decided that cases of ignition switch aren’t necessarily barred by the bankruptcy protection.  It said the company did not purportedly provide sufficient notification to potential creditors.

It’s possible the Supreme Court would make a decision in the spring if it is going to hear GM’s case and if that happens, arguments would happen in 2017, GM stated.  In the event the Supreme Court does not decide, the decision of the court of appeals is going to stand.

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