Tag: gm

Chrysler Accepts Future Liability; Current Claimants Still have no Recourse

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Two-and-a-half months after Chrysler took a pass on accepting responsibility for injuries and deaths caused by its defective products via an expedited bankruptcy plan, the automaker announced that it was going to accept future liability claims for vehicles made by the old company.

It would be heartwarming to imagine a corporate come-to-Jesus moment, but cooler calculations apparently prompted this new tack, including increased pressure from injury victims, Congress, and the threat of state-by-state litigation into the legality of wiping away future claimant’s rights.

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GM / Chrysler Bankruptcies: What’s In What’s Out

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The terms of the Chrysler and GM bankruptcies have created arbitrary and artificial classes of claimants. Here are the current parameters for liability:

Chrysler: Date of Bankruptcy Exit: June 10

What’s Out: The new Chrysler has no liability for any vehicles built by the old Chrysler. That means: the liability for all current, pending and future claims of any Chrysler vehicle built before the automaker exited bankruptcy belong to the old company.

Recovery of Unsecured Claims: Projected to be zero (or at most ½ cent/dollar).


General Motors: Date of Bankruptcy Exit: July 10

What’s In: The new GM agreed to assume liability for vehicles built by the old company, if the incident occurs after July 10, when GM exited bankruptcy.

What’s Out: The old GM retains the liability for all current and pending claims. If the incident occurred before July 10th, it is considered a pending claim, even if it has not yet been filed.

Recovery of Unsecured Claims: Unsecured claims in GM are predicted to receive between 10-20 cents on the dollar, several years from now. This is based on projections; there is no guarantee. Cost of administration claims will likely be paid in full for anyone having an accident in the five weeks in between when GM entered and exited bankruptcy, once the old company is liquidated.

Chrysler, GM Bankruptcies Concluded, Defect Victims Cheated

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WASHINGTON, D.C. – The Obama administration’s drive-by bankruptcies have left the victims of defect-related crashes to eat their dust, but consumer advocates are turning to other strategies to force Chrysler and General Motors to do the right thing.

Consumers for Auto Reliability and Safety, along with Consumer Action, Center for Auto Safety, Center for Justice & Democracy, and National Consumers League, have petitioned the Federal Trade Commission to require labels informing buyers of a used Chrysler’s unique liabilities. The label they’ve suggested goes like this:

“WARNING    This vehicle was produced prior to the date when the Chrysler bankruptcy was approved. If you buy this vehicle and are injured or killed, even if your injuries were caused by the manufacturer, you or your survivors will not be able to recover your losses by taking action against the manufacturer. If your passengers are injured or killed, even if their injuries were caused by the manufacturer, they and their survivors will not be able to recover their losses by taking action against the manufacturer.” Continue reading →