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  • Writer's pictureKirk Hartley

Product Liability Claimants Unhappy with Chrysler and GM Bankruptcies

An article in The Hill reports that product liability claimants are not happy with the developments in the Chrsyler and GM chapter 11 cases, so they are taking the issue to new fora – the Senate and the media. A similar article is in the WSJ blog known as Deal Journal. Specifically, they are upset that money is not being set aside to pay damages for pending product liability claims. Set out below is the relevant text from the article. The claims are said to be worth over $ 1 billion. One assumes the asbestos claimants are happy to let the car wreck claimants lead the charge on this issue. One also wonders who purports to speak for product liability claimants who have not yet been hurt, but inevitably will be hurt.


Lawyers cry foul over GM By Ian Swanson Posted: 06/02/09 08:19 PM [ET] Consumer groups and trial lawyers are crying foul over the Obama administration’s bankruptcy plans for General Motors and Chrysler. Those plans would extinguish all ongoing auto accident claims that blame a death or serious injury on a defective GM or Chrysler vehicle. “It’s a raw deal for consumers,” said Clarence Ditlow, executive director of the Center for Auto Safety. Ditlow said the plans are unusual in that they would prevent anyone from bringing a future liability claim against GM or Chrysler if a car already purchased from either company is defective and results in an accident causing death or serious injury. He and others said it was also unusual for no money to be set aside for liability claims. When companies producing asbestos went bankrupt, some funds were set aside for such claims, Ditlow said. Pam Gilbert, of Cuneo Gilbert and LaDuca LLP in Washington, said Obama’s auto task force should have looked out more for consumers and those with liability cases as it negotiated the complicated bankruptcy plans for both companies. She notes that the administration is guaranteeing warranties issued by GM during its bankruptcy, meaning someone could get a broken exhaust pipe found to be defective fixed even while GM is in bankruptcy. This means “they will fix the car, but if someone with a car suffers a serious injury or death because of a defection, we won’t fix the person,” Gilbert said. Although a committee representing consumers and those with cases against the companies was involved in negotiations over Chrysler’s and GM’s bankruptcies, the group has received less attention compared to unions and those holding company debt. That may change on Wednesday, when victims and families of victims with claims against the companies hold a press conference outside a Senate Commerce Committee hearing on GM’s bankruptcy. Those set to attend include the family of an ABC cameraman killed when the roof of his GM Suburban caved in during an accident, as well as the families of several children who suffered broken necks and blame faulty seatbelts, according to the Center for Justice and Democracy, a New York-based consumer group. Three hundred plaintiffs seeking $1.25 billion in damages are affected, another attorney told The Wall Street Journal’s ‘Deal Journal’ blog. General Motors says claimants will have the opportunity to submit their claims and have them resolved “as provided by the Bankruptcy Code and other applicable law, both as to amount and priority.” “We won’t discuss specific claims or the possible outcomes, as that will be determined by the court,” it said in a statement.

But those claims must be made against the old GM company after bankruptcy, meaning people with the claims will need to stand in line with other unsecured creditors to seek compensation from the old company’s remains, Gilbert said. The new GM that arises out of bankruptcy will not be liable for those claims. Ditlow blamed Obama’s auto task force for the situation, which he said would ultimately add to other problems. He cited the case of a young girl in New York left a quadriplegic from a car accident who has $500,000 in annual medical costs. That victim is likely to become a ward of the state, he said.

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