General Motors Co. will be in court today fighting to maintain a bankruptcy shield blocking legal claims from customers seeking compensation for declining resale values and injuries stemming from a defective ignition switch, the Wall Street Journal reported today. The switch has been tied to at least 56 deaths and stems from a safety lapse that Chief Executive Mary Barra has said arose from a “pattern of incompetence and neglect.” But today’s legal battle, with plaintiffs seeking billions of dollars in damages, is also largely the result of a significant concession GM made more than five years ago to expedite its emergence from bankruptcy proceedings. The automaker finds itself back in Bankruptcy Judge Robert Gerber’s courtroom because that deal weakened the very bankruptcy shield that GM is now trying to keep. Judge Gerber presided over GM’s government-backed restructuring and is essentially revisiting details of the case to decide whether plaintiffs can sue for losses associated with vehicles made before the company’s restructuring. The plaintiffs want GM stripped of its bankruptcy shield. GM for more than a decade failed to recall vehicles equipped with switches prone to jostling out of the run position and cutting power to air bags and other safety features.
