GM Shielded From Ignition Switch Claims Existing Before Bankruptcy Exit

Apr 18, 2015 10:25 AM EDT | Matt Mercuro

A Federal Bankruptcy Court ruled in New York this week that General Motors won't have to face "dozens" of lawsuits from issues linked to its faulty ignition switches.

Federal Bankruptcy Court Judge Robert Gerber decided not to modify the bankruptcy shield that protects the automaker of claims on vehicles that pre-date its 2009 Chapter 11 bankruptcy exit, The Associated Press reported.

GM hired lawyer Kenneth Feinberg to compensate victims of faulty switches and so far his office has approved of 84 death claims and 157 injury claims as of April 10, according to the latest GM's Ignition Compensation Claims Resolution Facility report.

Instead of taking compensation, some victims have decided to file lawsuits claiming GM violated their constitutional rights by not telling their customers about the issue sooner.

"Hundreds of victims and their families will go to bed tonight forever deprived of justice," said Texas attorney Robert Hilliard, who represents a number of plaintiffs in lawsuits against GM, according to the AP report. "GM, bathing in billions, may now turn its back on the dead and injured, worry free."

The ruling could save "New GM" upwards of $7 billion to $10 billion dollars in legal liabilities, according to the AP report.

In 2014, GM recalled more than 2.6 million vehicles with faulty switches despite knowing about the issue for 11 years.

GM isn't completely off the hook though. Gerber said that owners who claim the value of their vehicle went down as a result of "company actions" that happened after July 2009 can still sue the Detroit-based automaker.

Most of the vehicles affected by faulty ignition switches were sold before GM left bankruptcy protection, and a number of the crashes took place before the "New GM" was formed, according to the AP report.

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