GM Tries To Hide Behind Bankruptcy

Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Can I keep my car if I file bankruptcy?”


In a surprise to many who had begged GM to reconsider, the car company recently revealed it would ask a federal bankruptcy court to shield the company from lawsuits relating to defective automobiles that occurred prior to the company’s 2009 bankruptcy filing.


Detroit sign Charlotte Bankruptcy Attorney North Carolina Chapter 7 LawyerSeveral costly wrongful death suits have already been filed against General Motors regarding its faulty ignition switch system which has been linked to at least a dozen deaths. The problem involves the ignition switch slipping out of the “run” position, something that shuts down the engine and other crucial safety features like airbags. GM says the trouble has led to at least 13 deaths, though other consumer safety groups say the real number is many times higher.


GM has admitted that it first became aware of the problem more than a decade ago, yet it waited until February of this year to issue a recall. The choice to wait years and years to alert consumers to such a dangerous defect has stunned many and led experts to conclude the automaker could face billions of dollars in liability if it is discovered that many more people died in accidents related to the faulty ignition switch.


However, one thing GM has in its favor is its July 2009 bankruptcy filing. That bankruptcy led to a reorganization of the company and ensured that the GM which exists today is no longer liable for the liabilities incurred by the pre-2009 GM. Congressional leaders and safety critics had called on GM to avoid hiding behind the bankruptcy process, a call GM appears to have been unwilling to heed.


GM now says in legal motions that it is asking a bankruptcy court in New York to enforce an order from 2009, which detailed how GM was to be split into a new and an old company. Any lawsuits that involved conduct prior to 2009 would have to be filed against the old GM, now known as Motors Liquidation Co. GM has noted that the ignition switch actions involve vehicles that were designed, manufactured and sold by the old GM and, as a result, the new company should not be burdened by the potentially massive litigation costs relating to the cars.


Whether GM ultimately proves successful remains to be seen. A chorus of critics has accused the company and its CEO of hiding behind the bankruptcy to avoid paying devastated families the money they are owed. It is a sure bet that those on both sides of the issue will be watching the case closely as it continues to unfold.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find more resources here. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.


About The Author: 

Bryan 1  Bryan Stone is a Partner with Arnold & Smith, PLLC where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord tenant issues.  Originally from Macon Georgia, Mr. Stone attended the University of Georgia for a BBA in Banking and Finance and went on to Wake Forest to earn his law degree.  After law school Mr. Stone relocated to Charlotte where he has become quite involved in many local organizations.  He is currently the Chair of “Bravo!” the young professionals organization of Opera Carolina, he also founded the UGA Alumni Association of Charlotte.  In his spare time he enjoys perfecting his BBQ skills for the annual “Q-City BBQ Championships” and playing softball with the Mecklenburg County Bar Softball League.



“GM To Ask Bankruptcy Court For Lawsuit Protection,” by The Associated Press, published at



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