In Court, GM Refuses to Assume $2 Billion Liability for Pre-Bankruptcy Car Malfunctions

In a Nov. 5 bankruptcy court filing, General Motors (GM) and its Chapter 11 bankruptcy attorneys stated that the company shouldn’t be held responsible for liabilities associated with faulty cars manufactured before the automaker filed for Chapter 11 bankruptcy help and reorganization in 2009.

According to Reuters, GM is facing litigation from millions of people who bought the 2.6 million GM vehicles which have been recalled for faulty ignition switches this year alone. Before it sought help filing bankruptcy, GM had recalled some 9.6 million other vehicles.

GM claims that lawsuits regarding those vehicles apply to the “Old GM,” or the GM before it sought bankruptcy with its Chapter 11 bankruptcy attorneys — and, according to the company’s reasoning, the “New GM” is not responsible for the faulty ignition switches.

“(P)laintiffs resurrect the same failed arguments as the creditors before them made in seeking payments from New GM for Old GM’s liabilities,” the brief from GM said. GM cites its so-called “bankruptcy shield” which protects it from pre-bankruptcy liabilities.

According to MLive.com, if the bankruptcy judge doesn’t accept GM’s dismissal of this litigation in its Chapter 11 bankruptcy timeline, the automaker could face as much as $2 billion in liabilities. More than 100 individuals have filed lawsuits against GM as a result of the vehicles, which were made with ignition switches that would move out of the “run” position and into the “accessory” or “off” position on their own.

MLive.com reports that U.S. bankruptcy Judge Robert Gerber will hold a hearing regarding GM’s potential liabilities after Jan. 26 — and the decision could take more than a month to determine the amount of damages GM vehicle owners should be awarded.

What do you think about GM’s claims that it shouldn’t be responsible for its pre-bankruptcy faulty vehicles? Do you think vehicle owners should be awarded damages? Share your thoughts with us in the comments below.

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