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The consequences of General Motors’ long-delayed recall of defective small cars hit a grim milestone yesterday, when the company’s compensation fund said that it had approved the 100th death claim tied to faulty ignition switches, the New York Times reported today. The toll far exceeds the 13 victims that GM had said last year were the only known fatalities linked to ignitions that could suddenly cut off engine power and disable airbags. Lawyers involved in litigation against GM have accused the company of deliberately understating the magnitude of switch-related deaths in congressional hearings last year. “The success of the cover-up for over a decade leaves most of the victims unaccounted for,” said Robert Hilliard, one of the lead lawyers in a consolidated group of lawsuits against GM.

Freedom Industries officials said yesterday that they are willing to amend their bankruptcy plan to steer more money toward additional cleanup measures at the company’s Etowah Terminal — assuming that the West Virginia Department of Environmental Protection (DEP) will clarify what it wants done at the site, the Charleston (W.Va.) Gazette reported today. In a new filing in U.S. Bankruptcy Court, Freedom Chief Restructuring Officer Mark Welch welcomed the DEP’s proposal that the company set aside $1 million for the cleanup of the Elk River facility, where a January 2014 chemical leak contaminated the drinking water supply for 300,000 residents across the region. Welch said that the DEP’s formal objection to Freedom’s latest bankruptcy liquidation plan is “a positive step in the right direction” because state officials have, “for the first time in this process, provided [Freedom] with a specified target to meet.” Now, Welch said, he wants the DEP to “clearly define and justify the proposed uses” for the money agency officials say is needed for the cleanup.

Corinthian Colleges Inc. filed for bankruptcy, a week after closing its remaining 28 for-profit career schools in the biggest collapse in U.S. higher education, Bloomberg News reported yesterday. Corinthian’s meltdown began last year after the U.S. Education Department reduced its access to federal student aid. The company agreed to sell half its 107 campuses to Education Credit Management Corp. in November amid allegations that it falsified grades, attendance and job-placement rates. Corinthian received $1.4 billion in federal student aid in 2013 alone. The most recent closures ended instruction for about 16,000 students and spurred the loss of 2,700 jobs. Corinthian schools once counted more than 74,000 students and over 10,000 employees, according to court papers. The company was ordered April 17 to stop enrollments in California, where most of its remaining schools were located. It was also fined $30 million by the U.S. Education Department for misrepresenting job-placement rates to attract students at its Heald business schools.

A bankruptcy judge has ordered the Roman Catholic Diocese of Gallup, N.M., its insurance carriers and lawyers representing 58 alleged sexual-abuse victims to begin mediation no later than July 15, the Wall Street Journal reported on Saturday. Bankruptcy Judge David Thuma signed off on mediation at the request of both alleged victims and the diocese, which stretches across broad swaths of northern Arizona and New Mexico. In advance of mediation, lawyers representing the diocese, insurers and alleged victims have spent nearly a year and a half seeking out victims, assessing the value of the diocese’s assets and collecting evidence on the allegations of abuse and alleged cover-up by diocesan officials, much of which is said to have taken place decades ago. Susan Boswell, a lawyer for the Diocese of Gallup, said she hopes to arrive at a court-approved settlement with alleged victims and others well in advance of the second anniversary of the case in November.

Banks are being sued for loan provisions that can protect corporate clients from boardroom attacks by hedge funds and hostile bidders, the Wall Street Journal reported today. The lawsuits, filed on behalf of shareholders of corporate borrowers, say that the provisions — which require companies to repay debt ahead of schedule if dissidents seize majority control of their boards — entrench incumbent directors and discourage dissidents whose arrival could benefit all investors. The cases shine a light on corporate defenses of all stripes, which are under scrutiny as hedge funds ramp up boardroom assaults and hostile bidders seize on a hot merger market. The lawsuits against Bank of America Corp., Wells Fargo & Co., Citigroup Inc. and other banks in recent months also highlight a tug of war between lenders and corporate borrowers that has intensified as loan protections have eroded in recent years, market participants said.

Owners of General Motors Co. cars with faulty switches plan to expand a lawsuit over fallen prices June 12 after a bankruptcy court ruling that they can go forward, Bloomberg News reported yesterday. An amended suit will add plaintiffs, allege more defects and perhaps expand the claims against the carmaker, lawyer Steve Berman said on Friday at a Manhattan court conference. Berman, managing partner of Hagens Berman Sobol Shapiro LLP in Seattle, previously estimated that about 10 million customers are eligible to demand $750 each from GM, based on the bankruptcy court order, a total of $7.5 billion. An earlier suit claimed as much as $10 billion for 27 million drivers over assorted defects. Bankruptcy Judge <b>Robert Gerber</b> saved GM from billions in potential demands this month when he upheld its shield against claims tied to actions before its 2009 government bailout. A separate class action barred by his order will probably be dismissed, according to another federal judge assigned to sort and handle the cases.

General Motors Co. car owners will still seek $7.5 billion for the diminished value of recalled vehicles, despite a ruling that largely freed the automaker from liability for wrongdoing before its 2009 bankruptcy, Bloomberg News reported on Friday. That number was supplied by a lawyer for car owners the day after Bankruptcy Judge Robert Gerber upheld GM’s shield against claims tied to actions taken before its bailout. The attorney, Steve Berman, said that 10 million is a conservative estimate of the number of drivers still eligible to sue for about $750 each after Wednesday’s decision. The litigation stems from last year’s recall of cars for faulty ignition switches, which grew to cover GM vehicles for a number of flaws. Read more.

For further analysis of liquidation and litigation trusts, be sure to pick up a copy of ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts. 

The Roman Catholic Archdiocese of St. Paul and Minneapolis won a federal judge's approval yesterday to impose an Aug. 3 deadline for alleged sexual-abuse victims to come forward with claims despite objections from victims' lawyers, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Robert Kressel said that the August deadline, by which victims must file formal claims for compensation or potentially face challenges from the archdiocese, was not absolute and that claims could still be filed at any time. "This time period can be extended," he said. "That may or may not happen, but it is available."

General Motors Co. car owners will still seek $7.5 billion for the diminished value of recalled vehicles, despite a ruling that largely freed the automaker from liability for wrongdoing before its 2009 bankruptcy, Bloomberg News reported today. That number was supplied by a lawyer for car owners the day after Bankruptcy Judge Robert Gerber upheld GM’s shield against claims tied to actions taken before its bailout. The attorney, Steve Berman, said that 10 million is a conservative estimate of the number of drivers still eligible to sue for about $750 each after Wednesday’s decision. The litigation stems from last year’s recall of cars for faulty ignition switches, which grew to cover GM vehicles for a number of flaws. The owners can pursue “claims for economic loss caused by New GM’s misconduct in covering up the ignition switch defects and scores of other known defects,” plus damages, Berman said. GM escaped billions more in liability because Judge Gerber also ruled that the company can’t be sued for economic losses tied to so-called Old GM’s actions or over accidents that happened before the bailout. http://www.bloomberg.com/news/articles/2015-04-17/gm-car-owners-to-fight-on-for-billions-after-bankruptcy-ruling

For more on litigation and liquidation trusts in bankruptcy, be sure to pick up ABI’s A Practitioner's Guide to Liquidation and Litigation Trusts. 

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.