GM recall: bankruptcy judge advises on settlement image

As the scandal surrounding GM’s recall of 2.6 million cars equipped with defective ignition switches, with the automaker asking now a US Judge to enforce a so-called bankruptcy shield.

Back in 2009, Judge Robert Gerber of the US Bankruptcy Court in Manhattan oversaw General Motors exit from bankruptcy as a new company, with, among others, the resolution that it would get protected from litigation concerning actions of the “former” GM.

Now, the automaker is asking the same Judge to enforce the so-called shield, as it faces mountains of litigations from plaintiffs seeking compensation for the lost value of their cars due to the recall. In his first talks with both parties, Gerber said he wants the proceeds to move quickly – waiting for them to fill the briefs this week.

“Frankly, it would be great if whatever money is available for injured people could go to them, and not to litigation costs and attorneys’ fees,” Gerber said at a court conference. He added that he welcomed a resolution that would avoid a “monstrous battle.”

According to the obligations assumed by the “new” GM, accidents and injuries – including those which occurred after the bankruptcy played out but involved models made before the bankruptcy.

According to the plaintiffs, GM should not be shielded against the claims as the company purposely withheld the information about the defective cars from the bankruptcy court.

Via Reuters