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.
Several 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.