A federal appellate court has denied General Motors’ attempt to use a bankruptcy shield to block some auto defect lawsuits over faulty ignition switches, The Wall Street Journal reports. The court ruled that the automaker’s failure to reveal defects in its ignition switches that causes a number of fatalities and injuries violated consumers’ due process rights by failing to reveal those issues. The appellate court’s decision basically reversed a bankruptcy judge’s decision that had barred lawsuits with up to $10 billion in potential claims that arose before GM’s bankruptcy.
GM’s Failure to Disclose Defects
The appeals court found GM knew about the defective ignition switches during the 2009 government-brokered bankruptcy restructuring. GM did not disclose the defect until early 2014 despite the fact that engineers knew of problems with the switch more than a decade ago. These ignition switch defects have been linked to at least 124 deaths and many more serious injuries. The court made a strong statement against GM emphatically saying that it cannot “reward debtors who conceal claims against potential creditors.”
What This Court Decision Means
This decision essentially means that some of the personal injury, wrongful death and class action lawsuits filed against GM and stalled due to the bankruptcy issue, may now be able to proceed. In fact, it could expose GM to hundreds of additional cases. The serious defects involve ignition switches that could slip from the run position, disabling safety features including airbags. GM has so far reached settlements with the U.S. Justice Department, shareholders and thousands of consumers totaling more than $2 billion. This includes GM paying $900 million to settle criminal charges of wire fraud and concealing the defect from regulators.
Justice for Victims
As auto defect attorneys who fight for the rights of injured victims and families that have lost loved ones, we welcome the appellate court’s decision. At last, a majority of victims whose claims have been stalled due to the bankruptcy stay will now have their day in court and a chance to hold the automaker accountable for concealing these dangerous and deadly defects.