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AutoBlog: Bankruptcy filing reportedly allows GM, Chrysler to shed hundreds of product liability lawsuits

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Filed under: Government/Legal, Chrysler, LLC., GM

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Outside of bankruptcy, General Motors and Chrysler were no longer competitive enough to remain solvent. After Chapter 11 reorganization, the two automakers will have a clean financial statement and a whole lot fewer employees, plants, and dealers. Another area where the two automakers will receive a clean bill of health is product liability lawsuits, and the savings will be huge, The Detroit News reports. GM, for example, had $928 million in liability expenses (including court costs and lawyer fees) in 2008 and $1.1 billion in 2007.

The government has ruled that the new GM and Chrysler will not be held liable for vehicles sold by the old GM and Chrysler. Lawyers are still debating whether or not cars and trucks purchased after bankruptcy proceedings began will be covered, but anything before bankruptcy is apparently out of the picture. University of Michigan law professor and bankruptcy scholar John Pottow told the DetNews that GM lawyers gave him the impression that it was the government that was driving this issue:

"What's fascinating about this is that it is the government taking the hard line here, insisting that the new company should emerge free of those liabilities. It's the government actually thinking like hardheaded investors instead of taking the more predictable, more socialist line."

While the two companies' ledgers will look better without the threat of liability, the move is brutal for those who are awaiting trial or have already been awarded money but have yet to receive any funds. Those who have been permanently disabled as a result of alleged vehicle defects will now likely never receive a dime for their injuries. While pre-bankruptcy liabilities will be swept under the rug, GM and Chrysler will continue to cover all applicable warranties both pre- and post-bankruptcy.

In the meantime, attorneys general from a number of states aren't taking the matter lying down - eight separate states have filed objections to the provision in federal bankruptcy court on Friday.

[source: The Detroit News]

Bankruptcy filing reportedly allows GM, Chrysler to shed hundreds of product liability lawsuits originally appeared on Autoblog on Mon, 22 Jun 2009 14:27:00 EST. Please see our terms for use of feeds.

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:mind-blowing: Am I reading this right? GM and Chrysler will no longer be liable for ANY product that was sold BEFORE they went bankrupt? You have GOT to be kidding me! I am stunned.

Something about this just seems so wrong, I cannot put my finger on it, but it just feels like this is too good to be true. Especially with lawyers running the country (both sides of the aisle - not getting political) I have just never seen lawyers wipe the slate clean so readily. Ever.

Is this a good thing?

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This seems ass backwards to me. Why?

If you had an accident in a vehicle with a known defect and are bound to a wheelchair for the rest of your life, you get nothing.

If your door handle came off in your hand, it will be replaced based on the pre-existing warranty, free of charge.

That really, really sucks. It's not exactly a financial freedom when so many of these customers left out in the cold will nothing but bad things to say about any GM, old or new.

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Yeah, it doesn't make me want to buy another GM or Chrysler product if the one I have is causes me an accident or injury due to a defect they are no longer responsible for.

If this goes through, and I can't imagine it would due to all of the legal ramifications, it will hurt them more than help...because who wants to buy a product from a company that won't stand behind it?

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I think you guys are missing the point here. What the article is saying is that current lawsuits or complaints which are already existing on file or in court will be annulled. It does not say if GM will turn Nelson's eye if future mechanical TSB or recall is detected.

This sentence here is out of place.

Lawyers are still debating whether or not cars and trucks purchased after bankruptcy proceedings began will be covered, but anything before bankruptcy is apparently out of the picture.

They should have added if a law suit was filed during that period.

This sums it all

While pre-bankruptcy liabilities will be swept under the rug, GM and Chrysler will continue to cover all applicable warranties both pre- and post-bankruptcy.
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I think you guys are missing the point here. What the article is saying is that current lawsuits or complaints which are already existing on file or in court will be annulled. It does not say if GM will turn Nelson's eye if future mechanical TSB or recall is detected.

This sentence here is out of place.

They should have added if a law suit was filed during that period.

This sums it all

What that means is, if you bought a car from GM on May 31st, and there was a defect that caused you to lose your brakes which resulted in an accident, you can not sue GM for anything, even if it left you paralyzed. I don't think anyone was missing the point.

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What that means is, if you bought a car from GM on May 31st, and there was a defect that caused you to lose your brakes which resulted in an accident, you can not sue GM for anything, even if it left you paralyzed. I don't think anyone was missing the point.

Not unless it was a genuine problem because that is where the warranty issue can be raised and GM will continue to respect those.

I think government is putting end to the frivolous lawsuits. Most of these lawsuits are settled before they go the court and end up creating more dent than the ones that actually go to the court.

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Not unless it was a genuine problem because that is where the warranty issue can be raised and GM will continue to respect those.

I think government is putting end to the frivolous lawsuits. Most of these lawsuits are settled before they go the court and end up creating more dent than the ones that actually go to the court.

It means GM can not be sued. Unless GM voluntarily offers to pay your medical bills for you after an accident, you will not get a dime from them. Your warranty does not cover that.

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I think you guys are missing the point here. What the article is saying is that current lawsuits or complaints which are already existing on file or in court will be annulled. It does not say if GM will turn Nelson's eye if future mechanical TSB or recall is detected.

This sentence here is out of place.

They should have added if a law suit was filed during that period.

This sums it all

Irrelevant in my books. The sum they indicated as being wiped away affects a great deal of current customers; some of whom having life altering disabilities. "Oops, no compensation for you." It was quite clear in the article that people already awarded compensation in court, but had yet to receive their money will never get any at all now.

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Irrelevant in my books. The sum they indicated as being wiped away affects a great deal of current customers; some of whom having life altering disabilities. "Oops, no compensation for you." It was quite clear in the article that people already awarded compensation in court, but had yet to receive their money will never get any at all now.

But isn't it the same with the stock owners too? Oops no stocks or dividends for you. If you are looking to clean liabilities then every liability is a fair game. To GM these law suits are nothing but another number in red just like the debts or supplier's payments. It may not be morally or ethically correct, but accounting wise it is not.

What is important is whether a serious problem is detected it would be fixed or taken care of in the future, whether GM honors those warranties and problems which will lie under these warranties.

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But isn't it the same with the stock owners too? Oops no stocks or dividends for you. If you are looking to clean liabilities then every liability is a fair game. To GM these law suits are nothing but another number in red just like the debts or supplier's payments. It may not be morally or ethically correct, but accounting wise it is not.

What is important is whether a serious problem is detected it would be fixed or taken care of in the future, whether GM honors those warranties and problems which will lie under these warranties.

No it is not the same. Those stock holders aren't injured from a possible defect in a vehicle they purchased. Those stock holders may have lost their investment because it was a bad investment. Are you saying the consumer should just live with their injury because they made a bad decision to purchase a GM vehicle?

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No it is not the same. Those stock holders aren't injured from a possible defect in a vehicle they purchased. Those stock holders may have lost their investment because it was a bad investment. Are you saying the consumer should just live with their injury because they made a bad decision to purchase a GM vehicle?

I am not saying consumer should just live with injury. What I am saying is to GM and government those liabilities are nothing but a number with a dollar sign. It does not matter whether it is morally or ethically right, when you are looking at purging numbers anything is a fair game. What if GM would have filed Chapter 7? The situation would have been the same.

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I am not saying consumer should just live with injury. What I am saying is to GM and government those liabilities are nothing but a number with a dollar sign. It does not matter whether it is morally or ethically right, when you are looking at purging numbers anything is a fair game. What if GM would have filed Chapter 7? The situation would have been the same.

Well that's a poor stance to take when it is potentially reguarding peoples health, especially in cases that leaves someone disabled for the rest of their lives. It does NOT look good to buyers looking to buy new GM vehicles, and will hurt GM's image further.

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If that's the case maybe my first new car will be a Ford or a Nissan or a company that will actually stand behind the product.

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Also stock holder and car purchasers are not apples to apples comparisons. Investing is a risk, always has been and always will be. Buying a new car and shouldn't be when it comes to safety and defect issues and your ability to be compensated for possible injury you get from the car you purchased..

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Also stock holder and car purchasers are not apples to apples comparisons. Investing is a risk, always has been and always will be. Buying a new car and shouldn't be when it comes to safety and defect issues and your ability to be compensated for possible injury you get from the car you purchased..

Lawsuits number is just a number in the liability side just like stocks. Again the article does not say whether the same will apply for new vehicles. I think that is far stretch, a company immune from everything even for warranties or safety issues of newer cars. It will not happen. If those issues come to light they certainly will be addressed and better be. But if you are in the court or have a claim that claim will not give you money.

No matter how bad it is morally or ethically, government is purging everything that is bad. So this is just one part of what is bad.

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This is being challenged in court by 8 states. It will either A) need to be handled quickly to end bankruptcy or B) Will fester in the appeals process and hold up the "new" GM.

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This is great news. I'm sick of all those people who drive dangerously, take risks and then file a lawsuit against the manufacturer.

Screw them. I have zero sympathy.

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This is great news. I'm sick of all those people who drive dangerously, take risks and then file a lawsuit against the manufacturer.

Screw them. I have zero sympathy.

Yep, screw those people whose seatbelts fail to work, or whose airbags didn't deploy in the accident wasn't their fault but left them seriously injured.

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Yep, screw those people whose seatbelts fail to work, or whose airbags didn't deploy in the accident wasn't their fault but left them seriously injured.

Because that happened like ....never?

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Rare and never are two different things.

Seatbelt failure is a very rare occurrence, happening once or twice a year, according to a spokesman for the National Highway Traffic Safety Administration (NHTSA)

http://www.edmunds.com/ownership/safety/ar...17/article.html

But it's rare so f@#k those people right?

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Because that happened like ....never?

Great attitude. Lets see... GM X-bodies with premature brake lockup. Pintos and Crown Vics that became infernos when rear ended. Chrysler seats that failed during even minor rear end accidents, causing drivers to end up in the backseat, out of their seatbelts and unable to regain control of their vehicles.

Granted, those occurred a long time ago, but then there are the hundreds of safety defects that get buried in the news... so your current precious car likely has at least one defect that can kill or maim you and all of your passengers... regardless of how safe you drive.

Karma is a b*tch, so you better start taking public transportation.

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The media would have a field day over this, even if they may misinterpret it. Plenty of people here have, so I'd assume almost every lay-person and possible customer will, too.

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The media would have a field day over this, even if they may misinterpret it. Plenty of people here have, so I'd assume almost every lay-person and possible customer will, too.

How was it misinterpreted? Seems like everyone understands it to me.

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While the two companies' ledgers will look better without the threat of liability, the move is brutal for those who are awaiting trial or have already been awarded money but have yet to receive any funds. Those who have been permanently disabled as a result of alleged vehicle defects will now likely never receive a dime for their injuries.

I dont think the majority are misinterpreting this. If a design or manufacturing flaw results in injury or death, GM wont have to pay a dime, good for GM, bad for PR and the people driving the defective vehicles.

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