GM’s Bankruptcy Now Takes Center Stage In Recall Fight

Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Does Bankruptcy stop foreclosure?”


In an interesting intersection between the personal injury and bankruptcy worlds, federal authorities say they have launched an investigation into whether General Motors committed bankruptcy fraud when it filed for protection back in 2009. The issue concerns the recently announced 1.6 million-vehicle recall due to faulty ignition switches.


GM Headquarters Charlotte Bankruptcy Attorney North Carolina Chapter 11 LawyerThe faulty switches have already been linked to more than 300 deaths according to the Center for Auto Safety. While survivors and family members of victims seeking compensation for the harm they suffered have filed lawsuits against GM, others have expressed concerns about what impact the company’s 2009 bankruptcy could have on the legal process of victims.
The concern exists because it was recently been revealed that the faulty ignition switch issue goes back as far as 2001, meaning that millions of cars could have been involved in accidents that led to injuries or even deaths caused by the defective product. The trouble is that when GM filed for bankruptcy, all liability for accidents prior to that point could be waived given, ensuring that the bankruptcy process acts as a kind of legal shield for the automaker.


The reality is that because GM reorganized following its bankruptcy, the current General Motors is actual an entirely new and different legal entity than the one that existed prior to the filing. The new GM is technically not responsible under the terms of its bankruptcy exit for any legal claims that relate to incidents that occurred before July of 2009. Those claims would need to be brought against the old GM.


Now, the Justice Department says it is investigating whether GM may have lied by failing to disclose the ignition problem back in 2009. Some personal injury attorneys have said that victims of the faulty product should be allowed to sue the new GM given the active concealment of the safety problems on the part of company officials and that GM should face punishment for its fraudulent filing.


GM executives, federal justice department officials and bankruptcy trustees will now be digging into the issue. The hope is that GM is not allowed to use its bankruptcy to avoid taking financial responsibility for the harm it caused customers and their families. We can only hope that regulators hold GM’s feet to the fire, ensuring that innocent families are not denied the compensation they deserve.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828 or 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.



“U.S. eyes bankruptcy link in GM ignition defect probe: report,” published at



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