A bankruptcy judge ruled yesterday that General Motors Co. will not have to face dozens of lawsuits accusing it of concealing an ignition-switch defect that led to the recall of 2.6 million vehicles, Reuters reported yesterday. GM had argued that it was protected from claims on vehicles pre-dating its 2009 exit from chapter 11 bankruptcy, while plaintiffs in the lawsuits said the company violated their constitutional rights by failing to disclose the defect. The decision by Bankruptcy Judge Robert Gerber means GM may avoid potentially billions of dollars in liability, as well as the cost of defending those lawsuits, although claims arising from GM's conduct after its bankruptcy will not be affected. The plaintiffs will have to file their claims against the financially strapped "Old GM," the shell company comprised of bad assets GM shed in bankruptcy. As of October, Old GM's main assets were worth about $9.25 billion, versus roughly $32 billion in claims, a recovery of about 29 cents on the dollar for trust creditors. Judge Gerber held that GM economic-loss plaintiffs can still bring claims against New GM based solely on its post-bankruptcy conduct.
