The ignition switch recall has been a nightmare for General Motors Corporation. The scandal rocked the automotive industry just as the company was recovering from its 2009 bankruptcy. The company is finally in a position to settle a large portion of the personal injury lawsuits from this debacle. Only one thing stands in GM’s way—itself!
GM vs GM: Will New GM Pay for the Mistakes of Old GM?
In 2009, General Motors went bankrupt and the United States government bailed the company out. In the process of this bankruptcy a General Unsecured Creditors Trust was set up to handle any lawsuits or claims made against pre-restructured GM. This trust has come to be known as “Old GM”, and thanks to the GM ignition switch scandal, the trust may run dry very soon. So, what does that mean for the victims of GM’s faulty ignitions?
A total of 124 deaths were linked to the ignition switch scandal. Families of these victims, and other survivors have filed somewhere between 400 and 500 personal injury and wrongful death lawsuits and others have filed 11.9 million economic loss claims as well. The price to settle these lawsuits? Fifteen million dollars and $1 billion in GM stock.
Old GM is proposing this solution and New GM doesn’t like it. New GM claims that the trust is targeting GM’s current shareholders in a scheme that will devalue the company’s stocks. So, the restructured GM is trying to find a way to get out of providing $1 billion worth of stock as part of the settlement, but the company could have a hard time convincing a judge not to honor the settlement.
In July of 2016, a judge ruled that New GM was still responsible for the mistakes of Old GM, and attempts to appeal the decision have failed. Does this mean GM ignition switch victims will soon be stockholders of one of the largest automakers in the U.S.? The product liability attorneys here at Keefe Law Firm will continue to monitor the situation.
