After 17 consecutive profitable quarters, GM is going back to bankruptcy court. Why? The car manufacturer is trying to shut down an oncoming surge of class actions lawsuits related to the defective ignition switch that is now linked to 13 deaths and 2.6 million cars.

Why Bankruptcy Court?

In 2009, G.M. went into bankruptcy court and reorganized with the help of the federal government to stay afloat. One provision of that reorganization was that the “new” G.M. would be protected from lawsuits related to accidents that occurred before 2009.

Normally this kind of behavior wouldn’t be out of place. If a judge has agreed and made a ruling, then that’s that, and the fight is over. However, in this case there is a question of how much did G.M. disclose. Indeed, many attorneys and analysts are suggesting the company committed fraud.

Fraudulent Behavior?

When General Motors went to bankruptcy court, it already knew about the deadly flaw in their ignition switches and likely even knew the identity of those who had been killed by those problems. But in their reorganization they didn’t mention anything about it. By not revealing this information, they may have prevented the Judge from making an informed decision. That issue will certainly be debated in the courts in the coming weeks.

G.M. Response

General Motors claims that it will not ask the court to dismiss any personal injury or wrongful death lawsuits related to the ignition defect. The New York Times suggests that such a stance may soften the public relations blow, but is probably simply a financial decision since the price tag for the dozens of smaller class actions suits is likely to be much higher than the relatively few injury and death cases.

In the mean time, literally hundreds of attorneys are preparing to stand up for the rights of their clients against the corporate juggernaut. With 59 pending class actions filed on behalf of car owners seeking compensation for economic losses caused by the faulty ignition switch, there’s a lot on the line. This appeal in bankruptcy court may be larger than the original trial.

What does this mean for you?

This kind of situation only highlights the lengths to which corporations will go to avoid facing justice when they create, distribute, or sell a defective product. If you or a loved one ever find yourself injured by a product or service you purchased, you need a capable, experienced law firm on your side. If you have questions about product liability, or if your situation qualifies for compensation, you can call us any time.

http://www.abajournal.com/news/article/a_risky_move_gm_heads_to_bankruptcy_court_today_in_effort_to_head_off_ignit/