Most Americans are familiar with the fact that the major auto manufacturers relied on public assistance, in the form of loans, loan guarantees, and other government programs, to remain in business during the financial collapse of 2008 – 2009. During that time General Motors underwent a process called “managed bankruptcy” in which the company restructured its operations. What many U.S. citizens probably didn’t know about the bankruptcy was that the company would one day use it as an excuse to attempt to limit its liability in relation to defects in the company’s cars.
For the past decade GM has known that over 2 million of the vehicles it manufactured suffered from a deadly defect which caused the automobiles to suddenly lose power while on the road. Despite being made aware of the problem, and that people were dying as a result of car accidents caused by the defect, GM failed to issue a recall. Now, facing multiple lawsuits as a result of its negligence, GM is looking to claim that its 2009 bankruptcy effectively shields the company from any liability which occurred before the bankruptcy filing.
When the company filed for bankruptcy in 2009, GM supposedly killed off the “old GM” and emerged from bankruptcy as the “new GM.” In citing this contention, the company said "New GM's recall covenant does not create a basis for the plaintiffs to sue new GM for economic damages relating to a vehicle or part sold by old GM," in a recent filing with a Manhattan court.
Despite the filing, GM is promising that it will honor its "civil and legal obligations relating to injuries"