GM Relents on Product Liability

A week or so ago I wrote a post about GM’s attempt to rid itself of any product liability claims that might arise from autos it manufactured prior to its bankruptcy. There was some substantial push-back on this and it appears as if decency achieved a partial victory.

From the NYT:

General Motors and the Obama administration have reached a deal for the carmaker to assume responsibility for product liability claims filed after it emerges from bankruptcy as a new company, even those claims involving vehicles made by the old company, a person briefed on the matter said Saturday.

The deal resolves a problem that could have upended G.M.’s plan for a quick restructuring, this person said.

G.M. and the administration’s auto task force have been negotiating with more than a dozen state attorneys general who have objected to the company’s plan to sell its desirable assets to a new, government-financed entity by mid-July. A hearing to approve the plan is scheduled for Tuesday in federal bankruptcy court in Manhattan.

The chief concern for G.M. and the government is whether customers who have claims about existing products but have not yet filed lawsuits can sue the company in state courts. Because bankruptcy case law is murky on the matter, G.M. and the auto task force chose to assume the liability instead of risking a delay of the company’s emergence from bankruptcy.

If you currently are suing GM, however, you’re going to be out in the cold. Any pending litigation will stay with the old GM which means you get to try and wring blood out of a stone.

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About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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