General Motors Agrees to Accept Future Product Liability in Bankruptcy Concession

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A story published by Reuters recently describes General Motors Corporation’s decision to accept liability for future product defects as one of several concessions the company has made to expedite approval for a quick sale from bankruptcy. GM also said that it would alter the terms of its proposed asset sale to assuage the concerns of over 20 suppliers who objected to specifically the original terms. They also discussed the future of a joint manufacturing plant with Toyota and GM said that it was actively working on a resolution with the other car-manufacturing giant.

General Motors addresses these and several other concerns as part of documents filed in the last week of June 2009 in a New York bankruptcy court. GM has been actively working with Obama administration officials to smooth over many of the problems that arose when the company filed bankruptcy. No fewer than nine state attorney generals had objected to GM’s proposed reorganization because the original terms would have left GM buyers without any protections against product defects under state laws. GM responded by saying that it would continue to honor lemon law claims in California and throughout the nation so that if consumers purchased a defective vehicle, they would be entitled to a replacement vehicle or a refund.

The outcry over the terms of the bankruptcy caused GM and Obama administration officials to rethink the reorganization of the company and reconsider liability for future product liability claims. In a prepared statement that was part of the bankruptcy court filing, GM said, "The purchaser will expressly assume all product liability claims arising from accidents or other ... incidents arising from the operation of GM vehicles subject to the closing."

GM proposed that a new company be created under the reorganization plan to purchase the company’s best and most economically viable assets, and that the sale would be concluded by August 2009.

In response to the reorganization plan, a group of around 300 U.S. citizens with pending lawsuits against GM for alleged product defects vigorously objected to the terms of the reorganization. They claim that any wrongful death and injury claims that would be paid from the sale of GM’s less financially viable assets are nearly worthless. This group named the Ad Hoc Committee of Consumer Victims of General Motors said at the bankruptcy court filing that the car manufacturer’s insurance would only cover product liability claims of up to $35 million for each claim. The group claims that figure would be insufficient to cover the claims outlined in the vast majority of their pending lawsuits as many of the victims in the lawsuits suffered “devastating injuries” from alleged defects in the GM vehicles.

If you or someone you care for has been injured or killed due to a product defect in any kind of vehicle, you need legal counsel and representation from a consumer advocate with knowledge and experience relating to California lemon law and auto product liability. For more information and a free consultation, contact the Law Offices of Howard D. Silver today at 866.49.LEMON.