Appeals Court rules GM can’t hide behind bankruptcy for defective ignition switches

On July 13, 2016, the 2nd U.S. Circuit Court of Appeals reversed a previous bankruptcy court ruling that prevented plaintiffs from suing General Motors for knowingly mass producing vehicles with defective ignition switches.

The defect contributed to hundreds of injuries and deaths. The vehicles also lost value when GM’s cover-up came to light. GM had previously argued that its 2009 bankruptcy filing protected the manufacturer from certain litigants who are currently seeking compensation. U.S. Bankruptcy Judge Robert Gerber agreed, ruling in GM’s favor in 2015.

The 2nd Circuit Court of Appeals today reversed Judge Gerber’s ruling, stating that GM’s argument would essentially ask the court to “reward debtors who conceal claims against potential creditors. We decline to do so. … Due process applies even in a company’s moment of crisis.”

Motley Rice attorneys represent people harmed by defective GM ignition switches.

“The appeals court reached the correct result as we were confident it would," said Joe Rice, Motley Rice co-founder and Plaintiffs’ Executive Committee member for the multidistrict litigation In re General Motors LLC Ignition Switch Litigation. "GM can't hide the liability they admitted in the criminal proceedings behind the bankruptcy.”

Motley Rice Member Attorney Jodi Flowers, too, said that the reversal was “fair.”

“GM endangered the lives of millions when it covered up this deadly defect for more than a decade before issuing a recall for its defective ignition switches,” Flowers said. “GM ignored the safety of the public, and it must pay the price for that choice. GM ran to the bankruptcy court for protection from liability, claiming that the bankruptcy that occurred when the U.S. taxpayers bailed GM out in 2009 gave them legal immunity because they were ‘New GM.’ Today the unfairness of that result was recognized.”

Learn more about catastrophic injury claims and economic loss claims for GM Ignition Defects and Recalls.