GM Litigation Raises Difficult Bankruptcy Questions


In the article entitled GM Litigation Raises Difficult Bankruptcy Questions,” published by Law360 in its Expert Analysis section, special counsel Ben Feder discusses complex issues arising from the 2009 sale of substantially all of the assets of General Motors Corp. pursuant to Section 363 of the Bankruptcy Code. These issues pertain to the extent to which purchasers (in this case, new GM”) of bankruptcy-related assets may fully insulate themselves from future claims against the seller (here, old GM”). Ben explains that ignition switch defects in cars manufactured prior to 2009 that allegedly caused numerous deaths and injuries were known by employees of old GM but were not properly reported (or perhaps were deliberately covered up). Vehicle owners have sued new GM, seeking compensation for economic damages caused by the defects.” In response, new GM has moved to enforce the sale order injunction against such claims; however, the plaintiff vehicle owners argue that to enforce the sale order against them when they could not have been aware in 2009 of the potential ignition switch defects would violate essential precepts of due process.” Ben’s article identifies the crucial issues at stake in the dispute and discusses subsequent case developments.