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GM Gambles on Reversal of Appeals Court Ruling

Company exposed to new set of liabilities.

by on Aug.15, 2016

GM is appealing the ruling of a three judge panel on the court of appeals that exposes it to millions of dollars in new liabilities.

Lawyers for General Motors are gambling they can persuade the full panel of judges from the U.S. Second Circuit Court of Appeals to reverse an opinion by one the court’s three judge panels in the ongoing battle surrounding its faulty ignition switches.

The panel recently ruled against the company, leaving it potentially facing millions in dollars in additional liabilities in the lengthy legal fight over the defective ignition switch in GM vehicles linked to more than 120 deaths.

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The original ruling, which was made public in July, represented a significant setback for GM in the long-running litigation since it reversed part of a bankruptcy court decision that protected the automaker from some lawsuits over the defect that prompted the recall of 2.6 million vehicles in 2014. (more…)

GM’s Legal Problems Continue to Grow

Automaker likely to be center of Presidential campaign this fall.

by on Jul.20, 2016

Donald Trump's selection of Indiana Gov. Mike Pence is likely to keep GM as well as Fiat Chrysler in the news. Pence was a critic of the auto baillout.

If you listen to General Motors executives, the company’s 2009 bankruptcy is an event from the company’s distant history. For GM’s lawyers, however, the bankruptcy and its aftermath is still very much alive.

Many of the creditors have never given up trying to recover the money they say is owed to them by what has come to be known as “Old GM,” and the trust that has liquidated assets, primarily real estate that the company abandoned, during its short trip through bankruptcy court back seven years ago.

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Earlier this week, the dissatisfied creditors won the right from bankruptcy judge in Manhattan to pursue a $1.5 billion claim, stemming from the bankruptcy. (more…)

“New” GM Scores Small Court Victory

Judge claims car owners can't sue for lost value.

by on Jul.18, 2016

GM scored a small victory in court today when a judge dismissed a large chunk of potential claims against the automaker related to its faulty ignitions.

A New York federal judge dismissed a portion of the claims lodged by a proposed class of car owners within the General Motors Co. – “New” GM – ignition switch multi-district litigation, saying they exaggerated their claim.

The group argues the automaker’s alleged cover-up of dozens of defects devalued their vehicles, suggesting the damages run as high as $10 billion, but in a ruling certain to be appealed, a federal district judge in Manhattan has ruled the drivers’ “unprecedented” damages theory was flawed.

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The plaintiffs’ pursuit of damages based purely on perceived harm to GM’s brand following more than 70 recalls in 2014 was “unprecedented and unsound,” U.S. District Judge Jesse Furman wrote in his opinion, adding to the complex legal thicket surrounding the ignition switch controversy. (more…)

Bankruptcy May Save GM Once Again

Filing terms prevent pre-2009 product liability lawsuits.

by on Mar.10, 2014

The 2004 Saturn Ion Coupe is on the list of vehicles being recalled by GM, but the automaker may not be accountable for the vehicles.

Bankruptcy saved General Motors and it may save the company again, at least from a significant liability issue and the millions of dollars that might go with it.

When GM went through bankruptcy it created a “new” GM leaving the debt and many of the liabilities with the “old” GM. This separation extends to product liability, according to an Automotive News report.

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Under the terms of its restructuring, GM’s product liability extends only to accidents that happened after the “new” company exited bankruptcy in July 2009, Automotive News reported. Plaintiffs injured before that time would have to take “old” GM to Bankruptcy Court. The chances of getting compensation in that setting are very low. (more…)

General Motors Wants To Go Out Of Business

The "Old GM," that is.

by on Sep.02, 2010

Motors Liquidation CEO Al Koch wants court approval for a plan to wrap up operations at "Old" GM.

General Motors is ready to close up shop and disappear for good.  The “old” General Motors Corp., that is, the one that went into Chapter 11 last year.

Formally known as Motors Liquidation Co., it’s all that’s left of the bankrupt side of the business, abandoned plants and other assets that were to be used to help cover the billions of dollars in liabilities that the new GM shed as part of its court-ordered reorganization.

Al Koch, the reorganization specialist who has been serving as CEO of Motors Liquidation, hopes to get court approval for a final plan that  would divide those remaining assets into four individual trusts.  Approval could come by early 2011, though probably not in time for the “new” GM’s upcoming IPO, according to company sources.

Numerous creditors initially tried to block or revise the GM bankruptcy filing, last year, but their demands ultimately were sidelined by the Obama Administration, which came up with roughly $50 billion in federal assistance to keep the automaker alive.  In all, Motors Liquidation has received over 70,000 claims worth more than $275 billion.  Old GM managers say they have since resolved or rejected about $150 billion of those.

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Among those who now have a stake in new GM are bondholders, who themselves lost $27 billion as part of the bankruptcy.  But they were given a 10% stake in the new company and warrants to purchase another 15%.

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