General Motors Co.’s move to freeze ignition-defect lawsuits in California and Texas has solid legal precedent behind it and could help slash customer demands for compensation by billions of dollars, Bloomberg News reported yesterday. GM asked federal judges in both states last week to delay litigation over the defect in several of its models until a U.S. bankruptcy judge in New York rules whether some accident victims’ claims can be brought without violating a sale order in its 2009 reorganization. The aggressive legal strategy runs the risk of further damaging GM’s image with lawmakers and the public. A win in bankruptcy court would allow GM to declare it’s not responsible for defect liabilities, said Chip Bowles, a bankruptcy lawyer at Bingham Greenebaum Doll LLP. Bankruptcy Judge Robert Gerber’s 2009 order let the current GM reject its predecessor’s liabilities, including claims for damages based on design defects, the automaker said in filings in San Francisco and Corpus Christi, Texas. Judge Gerber’s original ruling on liability is “quite clear,” said Prof. Stephen Lubben of Seton Hall University School of Law. “Having the court reaffirm its order could head off attempts to litigate the issue before some other court, which might not be as well-versed in bankruptcy and the broad reach of the bankruptcy code.” Read more.
http://www.bloomberg.com/news/print/2014-04-16/gm-move-to-freeze-lawsui…
For further analysis, make sure to attend the "Large Complex Trusts: A General Motors Case Study" panel at ABI's Annual Spring Meeting. This panel will discuss the General Motors bankruptcy case with an in-depth discussion about the issuance of public units in a major bankruptcy. The session will also include the challenges addressed by the trust such as liability claims. For more information or to register, please click here: http://www.abiworld.org/ASM14/