A major question regarding GM’s liability for pre-2009 ignition switch defects has finally been answered. The question was whether or not the company could avoid liability for ignition switch defects that occurred prior to the company’s 2009 bankruptcy restructuring. For some time, it looked like the answer to that question was Yes, New GM would be protected from pre-bankruptcy claims.
Orlando GM attorney Ken McKenna of DWKMRS explains, “The bankruptcy judge who oversaw the bankruptcy restructuring issued a very detailed order. The judge’s theory was that the GM crisis combined with the global financial crisis was a unique circumstance, and one of the casualties was ignition switch defect victims from before the bankruptcy restructuring. At that time, GM had yet to publically acknowledge the ignition switch defect and many victims were unaware that they had potential claims that would be impacted by the bankruptcy and restructuring.”
Now, a federal court of appeals has ruled that New GM cannot avoid lawsuits related to ignition switch defects that occurred prior to the 2009 restructuring. New GM has asked the appellate court to reconsider its opinion and will likely take the case to the U.S. Supreme Court before paying pre-bankruptcy claims.
This is good news for victims who pursued ignition switch lawsuits rather than participating in the New GM settlement fund. Old lawsuits may be revived, including class-action lawsuits, and even victims who were denied settlement deals may now have a chance at obtaining compensation for their losses. In addition, the many victims who didn’t even know they had a potential claim prior to 2009 may be eligible for compensation.
Background On The GM Ignition Switch Ruling
Prior to 2009, GM knew of an ignition switch defect in millions of GM cars that could cause serious injury or death. In 2009, Old GM filed for Chapter 11 bankruptcy protection and all existing claims against GM were discharged. The restructuring was very specific about what obligations New GM had to take on. The restructuring had a very specific way that creditors were handled, clearly defining which creditors claims survived the restructuring. The known and unknown personal injury claims did not.
Central to the question was the fact that GM did not disclose the ignition switch defect during its bankruptcy proceedings, which severely limited the victims’ opportunities to obtain compensation. In 2016, we finally received an answer when the 2nd Circuit Court of Appeals ruled that GM knew or should have known about the defect and yet, did nothing to correct the problem, essentially concealing such claims from their creditors.
“The reason the original bankruptcy ruling was such a harsh blow to victims was because many of the executives in the New GM were the same as the Old GM executives. New GM was enabled to profit from their cover-up when the judge blocked lawsuits from pre-bankruptcy ignition-switch defect victims. Furthermore, the bankruptcy restructuring happened in a matter of 22 days. That didn’t give ignition switch defect victims any time to make their voices heard, or time for many victims to know they even had a claim,” McKenna noted. “Old GM did not acknowledge the ignition switch problem during the restructuring, and the public was still largely in the dark. It appears that Old GM knew what was coming and tried to dodge responsibility by covering up the ignition switch problem.”
New Life For Stalled Ignition Switch Product Liability Lawsuits
While this is certainly good news for victims, it’s not a guarantee that they will receive compensation for damages sustained. As McKenna explained, “To get appellate relief from the federal circuit for something like this is a long shot. The cases are affirmed by the federal circuit about 80% of the time, so getting this well-reasoned opinion is pretty groundbreaking. From the perspective of the law, due process, and fairness, it’s the right ruling. It doesn’t mean people win their cases, but it means they get a fair shot.”
Contact Orlando Product Liability Attorney Ken McKenna For Representation And Advice
If you or a loved one have been injured due to the General Motors ignition switch failure or a different product, contact Ken McKenna, an Orlando product liability attorney at DWKMRS to discuss your situation. Call 888-726-6735 or contact us online.