Ignition-switches plaintiffs ask bankruptcy judge to lift GM bankruptcy shield

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What are my alternatives to bankruptcy ?”


When General Motors ended its “swift” 2009 bankruptcy, it emerged a new company shielded from claims arising from bad, pre-bankruptcy debts and bad assets, according to Fox Business.

Ignition Switch Charlotte Bankruptcy Lawyer North Carolina Chapter 7 AttorneyLast week, however, a group of attorneys representing plaintiffs who allege their General Motors-made cars dropped in value as a result of defects in ignition switches argued before a New York bankruptcy judge that the company is not entitled to bankruptcy protection because it “engaged in fraud before and after” its 2009 bankruptcy sale.

The plaintiffs in the General Motors cases want the company to pay for “the lost resale value of the plaintiffs’ cars and for loaner vehicles and repairs,” according to Fox Business.

General Motors, on the other hand, argued to Judge Robert Gerber that the company is entitled to the bankruptcy shield, and that a bankruptcy court cannot “make changes and exceptions” to the protections afforded by the bankruptcy shield. The hearing was held before Judge Gerber in United States Bankruptcy Court for the Southern District of New York.

According to Fox Business, Judge Gerber appeared to be skeptical of some aspects of the plaintiffs’ claims, but he did appear to indicate that he may be willing to consider a piercing of the bankruptcy shield for individual claimants who can demonstrate that they were deprived of their Constitutional rights.

The Fourteenth Amendment to the United States Constitution provides that persons cannot be deprived of money or property without due process of law. Due process of law is commonly defined as notice and the right to a hearing.

In the past year alone, plaintiffs have filed more-than one-hundred class-action lawsuits against General Motors over defective ignition switches. In the lawsuits, plaintiffs allege that “an ignition switch defect… caused cars to stall, knocking out their power steering and deactivating their airbags,” according to Fox Business.

General Motors has acknowledged that 56 people were killed in accidents involving the defective ignition switches. The company has also acknowledged publically that it knew about the problem with the ignition switches as long ago as 2004. It did not acknowledge that it knew about the problem until 2014—five years after the company’s bankruptcy—when it issued a recall for some 30-million vehicles affected in North America.

The plaintiffs in the current actions allege that they were denied due process of law because General Motors concealed the issues relating to the defective ignition switches, thereby denying the plaintiffs the ability to discover the defects, the cause thereof and General Motors’ liability therefor, in time to assert their claims in the company’s bankruptcy.

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



About the Author

Bryan 1Bryan 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.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.







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