In 2009, the US government bailed out the automotive industry. General Motors was one of the companies that the government helped during the financial crisis. GM became a new entity, essentially creating a “new” GM and an “old” GM in bankruptcy court. The bankruptcy settlement left pre-2009 liabilities in the “old” GM. The “new” GM is the company that is currently manufacturing cars. Lawsuits, however, are attempting to challenge the distinction between the two, specifically with regards to which entity is liable for which damages according to the Wall Street Journal on August 4, 2014.

Recently, GM recalled millions of automobiles after it was revealed that they were defective. Many of these cars had problems with the ignition switch that could cause the car to go from “running” mode to “accessory” mode while driving. If that happened during a crash, then the power steering, power brakes and airbags would not work. This left people dead and permanently injured. As a result, GM has set up a fund to pay out claims for those injured or killed in the accidents. The fund will pay victims and their families even if the accident occurred prior to 2009.

However, the victim’s fund does not cover every type of accident due to a defective car, and it does not include purely economic damages. As a result, some of these people are attempting to sue GM. For example, some people’s cars dropped in value once GM announced the recalls. Other people were injured, but do not qualify for the victim’s compensation fund. These lawsuits are not specifically against the “old” GM, which has $1 billion in funds. The “new” argues that the two entities are separate and so liabilities to do not transfer from the “old” GM to the “new.” If the judge decides that plaintiffs may sue the “new” GM, then there is more to go after as it has over $50 billion in market capitalization value and after the company that is currently operating. To some, it may seem that the “new” GM should be responsible for the “old” GM’s errors and misconduct. After all the company manufactures the same brands of automobiles in the same places and is run by many of the same people. GM argues that their major bankruptcy settlement prevents the “new” GM from lawsuits like this, but in the end, a judge will likely decide who is liable and for what.

Jayson Lutzky is a lawyer with an office in the Bronx, New York. He handles both personal bankruptcy cases and personal injury cases, whether the injury happened in a building or was the result of a defective product. In a bankruptcy, your debts may be discharged and wiped out. The lawyer has over 31 years of legal experience and offers free in office consultations. Call 718-514-6619 to set up a confidential appointment with a lawyer. Please note that if you have been severely injured, then home or hospital consultations are available. Visit www.MyNewYorkCityLawyer.com to learn more.