In a letter sent today to Members of Congress, Chrysler Group LLC announced that the company would accept product liability claims on vehicles manufactured by Chrysler LLC (now OldCarco LLC under the bankruptcy) before June 10, 2009, and involved in accidents on or after that date.
On June 10, 2009, Chrysler Group purchased substantially all of the productive assets of Old Carco and Fiat took effective control.
It appears a partial victory for product liability lawyers, who are substantial contributors to the Democratic party. Lawyers working behind the scenes had previously helped to force General Motors to accept all future product liability claims for its vehicles as it emerged from bankruptcy.
Under U.S. bankruptcy law it is usual for reorganized corporations to leave such claims behind in the ashes of the old structure under section 363(f) of the code, which allows companies to sell assets “free and clear of any interest in such property.”
However, state attorney generals were prepared to fight this interpretation, and the Auto Task Force established the compromise even though there was a strong “Federal Preemption of state law” argument that GM could have pursued.