GM Seeks Immunity From Lawsuits Due To Bankruptcy

Tyler Durden's picture

While the law has been something the US government and General Motors have been willing to 'bend' or break in the past (absolute priority 'shifts' in bankruptcy), we suspect this latest move by Mary Barra's new GM will do more PR damage. Simply put, as many suspected given Barra's testimony and comments in the past, Reuters reports that General Motors Co will ask a bankruptcy court to block any litigation of the alleged deaths associated with the ignition switch problem since they are related to the automaker's pre-2009 bankruptcy. Of course, as we noted here, the Feds are probing the company over whether they knowingly committed bankruptcy fraud.

As Reuters reports,

General Motors Co said it would ask a U.S. bankruptcy court to bar plaintiffs from proceeding with lawsuits against the automaker for claims related to any actions before it filed for bankruptcy in 2009.


The plaintiffs have alleged that they bought or leased vehicles that contained an ignition switch defect. The defect has been linked to the deaths of at least 13 people and resulted in the recall of 2.6 million GM vehicles.




GM said it would shortly file a motion in the Bankruptcy Court for the Southern District of New York to enforce an injunction contained in its sale order, which the company said bars plaintiffs from suing the reorganized company for any claims related to the predecessor company.

Of course, there is still the bankruptcy fraud we noted before,

Federal authorities are investigating whether General Motors hid an ignition switch defect when it filed for bankruptcy in 2009, The New York Times reported on Saturday.


The Justice Department's investigation of the automaker includes a probe of whether GM committed bankruptcy fraud by not disclosing the ignition problem, a person briefed on the inquiry told the Times on Friday, the paper said.


Authorities are also investigating whether GM understated the defect to federal safety regulators, the Times said.




The investigation is being run by FBI agents and federal prosecutors who worked on the fraud case against Toyota that ended in a $1.2 billion settlement last week, the paper said.

We wait with baited breath for outcome of this decision and how GM will spin this - and if the US government will bend the law once more... this time in favor of the families of the dead.

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Seasmoke's picture

So do I have to kill a bunch of people first or declare bankruptcy first ??? Just want to make sure I understand.

NotApplicable's picture

Somebody needs to put GM in prison, stat!

john39's picture

corporations are people too bro...  including free speach rights.   they even pay taxes (.01% effective rate)... 

Greenskeeper_Carl's picture

Ya, I'm thinking in this case it will be a corporation as a whole that might pay a penalty. No actual 'person' will be held responsible. They are only considered 'people' when convenient.

NoDebt's picture

Oh, man, just decompressed from 2 days of compiling an RFP response (my other day job, besides posting on ZH).

And I tune back in with the markets rocketing upward for no reason while GM is doing it's best "We're not the corporation you're looking for, move along" Jedi mindfuck trick.

I'm so glad things never change.  It's good to be back home.  Hobbits have The Shire, Hobos have rail cars and bridges, Eskimos have igloos... I have Zero Hedge and all the "you gotta be fucking kidding me!" news I can read.

Gringo Viejo's picture


Can ya hear me now? (w/ full apology to my gay's just a figure of speech I picked up in the Corps 45 years ago and never left me)

kchrisc's picture

They can free Corzine freeing up his cell for these people.

QQQBall's picture

I'd buy a politician or two first... then the order of BK versus criminal activity is a non-issue.

insanelysane's picture

From what I heard on this a few days ago, there were numerous discussions within the govmint about this when GM filed bankruptcy.  A few people did speak up and wanted verbiage that said that GM was not to be absolved of prior defects.  Of course the govmint kleptocracy must have known what was in the wind and didn't put in any specific verbiage to prevent this.  So when they come out and say, "No one, absolutely no one, could have seen this coming", they are full of shite.

Thought Processor's picture



GM should have been parted out.  It will see bankruptcy again in the future.  Just a matter of time.

The reason it failed the first time was because of its internal structure and culture, which did not change, so they are headed down the same road as before.   Business as usual.


New_Meat's picture

TP: Mitt Romney said that and got raked over the coals.  You too, sir, should stand by for a little "politics of personal destruction." - Ned

fallout11's picture

GM has been a failure in the making since John DeLorean wrote "On A Clear Day You Can See General Motors".

666's picture

I sincerely hope the sheeple will finally realize how bad GM was/is and stop buying their products. That's the only way to get "revenge" for those dead and injured, since the courts in the USSA have an exemplary record of being unjust, unfair, and lacking in common sense. GM must die and it's entirely up to the masses.

Disclaimer: I am currently a Honda Fit owner and never owned a GM product.

Iam_Silverman's picture

"never owned a GM product"

And this qualifies you to comment on their quality - how?

Not defending GM by any stretch of the imagination, I have owned some of their vehicles myself.  Some were good, one was very, very good*, and others?  Not so much.


*1994 Chevy C3500 Crew Cab, Dually, 454 TBI, NV4500, 4.10:1 rear axle.

666's picture

I have driven GM vehicles in the distant past before I ever owned a car and did endless repairs on my dad's '72 Buick Skylark; the same goes for Studebaker, Dodge, Plymouth and Ford. That's why the first car I bought was a VW Rabbit, followed by a Dodge Colt (made by Mitsubishi) and Honda Fit. The foreign cars ran better and hardly ever needed a repair, which was always minor, ran like new after 200K miles, and had a great resale value.

Aussie V's picture

Buick Skylark!! That came with positraction right?

Well, the '64 Skylark had a solid rear axle, so when the left tire would go up on the curb, the right tire would tilt out and ride along its edge. But that didn't happen here. The tire mark stayed flat and even. This car had an independent rear suspension. Now, in the '60's, there were only two other cars made in America that had positraction, and independent rear suspension, and enough power to make these marks. One was the Corvette, which could never be confused with the Buick Skylark. The other had the same body length, height, width, weight, wheel base, and wheel track as the '64 Skylark, and that was the 1963 Pontiac Tempest.

What the fuck is a "Sac O Suds"

Ignatius's picture

"GM said it would shortly file a motion in Bankruptcy Court for the Southern District of New York..."

Or, as I like to call it, The People's Court.

NOZZLE's picture

Still cant figure out how secured creditors, those that lent money to GM and took a secured interest in property (factory buildings, machinery, patents, trademwarks, copyrights) had their secured interests reduced to zero despite the fact that there was remaining value in the secured property and got nothing.

This is worse than disgusting, GM knew about these problems, just like the rest of the junk shit they have sold for decades, misled the Bankruptcy court (you try that sometime) and those claims are not the responsibility of the new GM. 

zaphod's picture

The answer is simple, the capital structure and rule of law mean nothing next to politically connected entitites (in this case unions)

Thought Processor's picture



Allowing the secured creditors to take the hit they did was flat out illegal.  Why it was allowed to happen simply speaks to how screwed up things are.

The US Gov. is broken (and er.... broke) and needs to be re-booted.

QQQBall's picture

Can't figure out what? That the gubbermint would use every means at its disposal to fuck them.... Take it now with a little grease or take it non-stop with a little spit on it.

oklaboy's picture

Let me guess how this is going to turn out? hummmmmm.....

LetsGetPhysical's picture

Government funded shit-show. 

swmnguy's picture

Wait a minute, isn't abuse of the bankruptcy system the very reason Joe Biden, the Senator from MBNA, sponsored the 2005 Bankruptcy Bill?  I know it had a lot to do with making utterly insolvent peasants go to financial counselors who mostly said, "Hey, buddy, you're so fucked, you should declare bankruptcy; thanks for playing."  But apparently it didn't have anything to do with malicious corporate fraud, and perhaps murder for profit.

NotApplicable's picture

Don't forget, it was also the trigger that changed everyone's credit cards from fixed to floating rate (unless you chose to destroy your credit history).

I'm still wondering when they'll drop that fucking bomb.

Iam_Silverman's picture

"I'm still wondering when they'll drop that fucking bomb."

The best solution to that problem is to pay your CC off every month (weekly for us).

Bangin7GramRocks's picture

How fucking dumb could they be! Saving $100 million in settlements will cost them $20 billion in goodwill. Who the fuck would buy a GM car again? It also leads me to believe that this is a much larger problem involving many more deaths or they wouldn't choose this despicable course of action.

Dr. Richard Head's picture

You seem to believe that the avegare CONsumer of General Murder cars is paying attention to anything but their Instagram feed. 

A Lunatic's picture

Eric Holder is looking into it, nothing to see here........

Citxmech's picture

Yeah - Mr. Holder puts on his "Stevie Wonder" inspection glasses every time he looks into corporate malfeasance.

Reaper's picture

Eric Holder is in charge of the FBI. Eric Holder protects his "people." Eric Holder has endorsed TBTP. Aren't GM and its unions TBTP and his "people," too?

swmnguy's picture

...And another thing.  When people call GM "Government Motors" I don't mind.  When they say we socialized GM, I mind a lot.  This latest outrage confirms it.  The US did NOT socialize GM. What the US did was to privatize the Treasury on behalf of GM insiders.  It's the opposite of "socializing" GM.  Just as the US didn't "socialize" Wall Street; the US privatized, and continues to privatize, the Treasury to absorb the nearly endless speculative losses in the Finance sector.  And "ObamaCare" is absolutely not "socialized" medicine; it's a privatization of the Treasury to bail out the insurance companies and the corporate health care sector from the predictable consequences of having priced themselves out of their customers' ability to pay.

Maybe it's just a semantic distinction at this point.  But when private assets are seized for the use of government ostensibly toward public needs, that's socialization.  When public assets are turned over to private interests to enrich them or at least to absolve them of the consequences of their actions, that's Fascism.  Maybe for most of us it's a distinction without a difference, and I'm cool with that I guess.  It just gets awfully hard to have a conversation when we use words to mean things other than what they actually mean.

NotApplicable's picture

I'd say that fascism makes the whole public-private divide entirely moot. (those words used to mean something too)

detached.amusement's picture

Why do you think Progressives have always been so hellbent on redefining themselves?  They usurped the term liberal for quite a while and made into basically the opposite of what classical liberalism is.  And 5 million other examples, for a perhaps conservative guesstimate...

usednabused's picture

Did you mean the same sort of bullshit talk we've gotten from our govt for a long time now, but truly hit a high note during the GWB years? Kind of like the 'clean air act' meaning lets allow a bunch more crap in the air. And the Forest conservation Inititatives meaning hey lets cut every fucking tree down? There's so many its painful to even think of them. Welcome to 1984 man..

JustObserving's picture

The scale of the problem is much larger than what GM admits to:

While GM admits to 31 crashes and 13 deaths due to this defect, a study by a consumer group has concluded there were 303 fatal crashes between 2002 and 2012 involving Cobalts and Ions in which the air bags failed to deploy.

SheepDog-One's picture

Gubment Motors STILL bankrupt, even given taxpayer bailouts and 'whatever' accounting standards, and now they get to run and hide in court? Gee, imagine that.

john39's picture

what, you mean bankruptcy wouldn't be a legal defense for me if I committed negligent homicide?

alien-IQ's picture

The depends entirely on your net worth.

usednabused's picture

But didnt the Assbama say that they paid every nickle back and with interest? LMAO at that worthless piece of shit. What a damned liar we have in office.

QQQBall's picture

Luckily for Obomber, accident victims don't vote.... Actually, they may just be victims - nothing accidental really.

z tranche's picture

Didn't work for Raymark in the '80s. They're going to be roasted for even trying this.

NotApplicable's picture

The only thing that matters in ALL of this?

How does it affect the upcoming elections.

alien-IQ's picture

Yeah, well, in the 80's Bankers were sent to jail. Now....not so much.

I guess you didn't get the memo about the coup that took place in the US. The rule of law only applies to the poor.

QQQBall's picture

At least GM didn't trample any desert turtles.

Iam_Silverman's picture

"GM didn't trample any desert turtles"

Whoa there buddy - don't be so hasty!  *  "Plus he said BLM vehicles appear to have crushed a tortoise burrow near the damaged water tank. "How's that conservation?""  *

Don't them Fed Boys like to sport about in Suburbans?