News outlets reported last week that General Motors will ask their bankruptcy judge to disallow any lawsuits connected to crashes of defective cars occurring before the company exited bankruptcy protection.
In the bankruptcy deal overseen by the Obama administration auto task force, GM was shielded from liability for incidents occurring prior to exiting bankruptcy. But GM agreed to assume liability coming from incidents after bankruptcy, even if the vehicles were manufactured prior to bankruptcy. So if you were seriously injured in an accident because your Chevy Cobalt ignition switch unexpectedly turned the car off the week before GM entered bankruptcy, you cannot receive any compensation. If I have a similar accident tomorrow in a 2007 Cobalt, I have legal standing to sue GM. Fair?
There is evidence that GM officials knew about this ignition defect in Cobalts and Ions 10 years ago. Some legal experts say this negates the liability protection. If GM knowingly sold cars with parts that were likely to fail, there shouldn’t be any limits on consumers seeking compensation. Maybe the compensation won’t be as much as might have been awarded a decade ago, but the ability to file a lawsuit should not be terminated.
Financial bankruptcy can be solved, moral bankruptcy is more difficult to overcome.