General Motors requested in a New York bankruptcy court protection from litigations on the ignition switch recall because of its 2009 emergence as a new entity.

Now, car owners who sought legal compensation from the automaker on the cars involved in the defective ignition switch recall challenged the company’s filling, calling it legally “unsupportable.”

GM is seeking bankruptcy law protection from car owners, skipping issues that involved victims, but the car owners decided to challenge this position, saying in a court filing that since GM decided to fraudulently hide its knowledge of the defect – allegedly known since 2001- it shouldn’t be entitled to the law’s protection.

Back in 2009, during the bankruptcy reorganization US Bankruptcy Judge Robert Gerber dismissed many of GM’s liabilities, leaving only some warranty obligations and accident responsibility. Unfortunately for the car owners, many bankruptcy lawyers think it would be hard for them to reopen the case.

“This is very difficult,” Bowles, a bankruptcy practitioner, said. “However there is a middle ground and that would be the parties requesting discovery,” or pre-trial evidence from GM, to prove fraud. “There is a decent chance that Gerber would allow discovery.”

Among the plaintiff suits, car owners opened around 50 trials against GM in federal courts in states including Texas and California, with one lawyer seeking close to $10 billion to replace depreciated GM models.

Via Bloomberg


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