tells court it not liable for claims over pre-bankruptcy
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[November 06, 2014]
By Jessica Dye and Nick Brown
NEW YORK (Reuters) - General Motors <GM.N>
said in a court filing on Wednesday that it should not have to face
lawsuits based on safety issues in cars made before its 2009 bankruptcy,
including a faulty ignition switch that led to the recall of 2.6 million
cars earlier this year.
The brief, filed in Manhattan bankruptcy court, lays out GM’s legal
arguments and is the opening salvo in litigation from GM drivers who
say the automaker should make them whole for losses related to
recalls this year.
The ignition switch recalls, which began in February, have since
grown to encompass numerous problems affecting millions of vehicles.
The company is facing some 130 lawsuits over accidents and lost
In April, GM asked Judge Robert Gerber of the U.S. Bankruptcy Court
in Manhattan, who oversaw the bankruptcy, to bar claims related to
vehicles made before 2009 based on the terms of the sale order that
created the so-called “New GM.” Liabilities related to older
vehicles were largely retained by a shell company now known as “Old
Plaintiffs’ lawyers have asked Gerber to rule that bankruptcy
protection does not apply because their clients were not informed
about the problems at the time and had no chance to argue their
cases during the proceedings.
On Wednesday, GM said plaintiffs’ lawyers were trying to re-litigate
issues that had been aired fully and settled five years ago.
“(P)laintiffs resurrect the same failed arguments as the creditors
before them made in seeking payments from New GM for Old GM’s
liabilities,” the brief said.
The dispute is broken into four so-called “threshold” issues that
Gerber decided should be dealt with at the outset of the case. GM
maintains it has the upper hand on all four.
It rejected plaintiffs’ contention that they were not given notice
of the bankruptcy sale in violation of their due process rights. It
also stressed that none of its actions constitute fraud against the
bankruptcy court, which is reserved for “egregious” conduct that
“defiles the court itself.” And it asserted that any grievances
about the sale process should be against Old GM, which was
responsible for the transaction.
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Furthermore, the carmaker said, the defects at issue are liabilities
that remain the responsibility of Old GM.
In an emailed statement, GM spokesman Alan Adler said the company
believed its position was consistent with federal law and legal
precedent. Adler added that the company has established an
out-of-court program run by lawyer Kenneth Feinberg to provide
compensation for claims on behalf of individuals injured or killed
in pre-bankruptcy crashes.
A lead lawyer for the plaintiffs, Steve Berman, said in an email
that the filing was expected.
"I say bring it, we will beat it," he said.
Plaintiffs' response is due on Dec. 16, and Gerber has scheduled a
hearing for Jan. 26.
(Reporting by Jessica Dye and Nick Brown; Editing by Alexia
Garamfalvi and Andre Grenon)
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