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.
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.
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.