Have You Been Injured? We're Ready to Fight for You.

GM Bailout may Nullify Some Crash Victims’ Claims

Published on Jun 12, 2014 at 8:46 am in Auto Product Liability.

Recent news that heads rolled at General Motors may reassure some that the company is taking responsibility for becoming aware of defective devices in its vehicles but not taking steps to cure the problem before more people died.

Now, lawsuits over the faulty ignition switches are bringing to light a fact many consumers are probably not aware of: when the US government agreed to bail out GM during the recession, the structure of the deal assured GM’s bank lenders were paid back, while leaving many creditors in the dust. Liability appears to have been wiped out for any existing judgments against the company.

This move really adds insult to tragic injury. While the bank debts may have been secured, therefore, technically placing them higher in the bankruptcy repayment order, those banks knew and assumed their lending risks. Families with loved ones killed due to manufacturing defects did not choose to become unsecured creditors.

One old case involved a family whose adult daughter was killed in her 1998 Dodge Caravan when her airbag failed to deploy due to a manufacturing defect. Chrysler was found liable in 2009 and the jury awarded her surviving child and family $2.2 million.

Before Chrysler paid the damages, the deal was struck for the government-brokered bankruptcy and bailout of $12.5 billion. Now, Chrysler still hasn’t paid that family their court-awarded damages, and may not have to.

After many state Attorneys General complained about the deal, GM and Chrysler agreed to remain liable for lawsuits involving accidents occurring after the bankruptcy sales. But for consumers who had already filed lawsuits or even had already been awarded damages before the bankruptcies – they may likely get far less than they might be owed.

Plaintiffs with pre-bankruptcy/bailout cases have been agreeing to settlements, such as 30 cents on the dollar, which can be paid out with shares and warrants from a trust that received a percent of new stock for unsecured creditors’ debts.

Some victims and families with pre-bailout suits are holding out for more of what they’re entitled to – but their legal road ahead is not certain.

In GM’s case, everyone agrees the company is liable for actions filed after its bankruptcy filing date in 2009 – but a new wrinkle comes with the ignition suits. In one family’s case, their daughter died while driving a Chevrolet Cobalt — one of the cars GM now admits had the deadly ignition defect. Their daughter’s accident occurred before the bankruptcy-bailout, but there is hope that because GM knew about the problem before the bankruptcy and failed to fix it, GM might be held liable.

The LA Times reports that the number of deaths related to the faulty ignition switch could be more than 300. More than half of those accidents occurred before the bankruptcy.

Meet Your Team

Tad Thomas - Trial Lawyer

Tad Thomas

Managing Partner

Tad Thomas has dedicated his practice to representing plaintiffs in various types of civil litigation, including personal injury, business litigation, class actions, and multi-district litigation.

After graduating with his law degree in 2000 from Salmon P. Chase College of Law at Northern Kentucky University, Mr. Thomas immediately opened his own private practice and began representing injury victims.

In 2011, Thomas Law Offices was established in Louisville, Kentucky. Over the past decade, Mr. Thomas has expanded his firm and now has offices in three additional locations: Cincinnati, Ohio, Columbia, Missouri, and Chicago, Illinois. He is also a frequent lecturer on topics like trial skills and ethics and technology.

Free Case Evaluation

At Thomas Law Offices, our personal injury attorneys recognize that our potential clients are likely going through some of the most difficult times of their lives. We don't want you to have to worry about paying out-of-pocket for legal advice when you're just starting to learn your legal rights and options. That's why we provide free case evaluations. We'll offer our expert advice about your potential case and walk you through how we can help you.

Call us or fill out the form below to tell us about your potential case and a personal injury lawyer will get back to you as quickly as possible.

Legal & Firm News

Multi-Vehicle Accidents: Who Pays for Chain Reaction Crashes?

You’re driving down the road on your way to work in heavy traffic. Everything seems standard for your morning commute until you’re sideswiped by a passing vehicle and subsequently rear-ended by the car behind you when you brake. Emergency responders arrive at the scene, and you’re treated for your injuries and told to follow up […]

Read More

5 Questions to Ask During a Free Case Consultation

If you’ve been injured in an accident and are looking to pursue compensation from the at-fault party, you may not know where to turn. Fortunately, personal injury lawyers can help accident victims file a strong claim that proves a monetary award is owed.

Read More

How to Stay Safe Around Pools This Summer

As we’re now just past the Fourth of July holiday weekend, summer is in full swing. With the 2021 heatwave affecting most of the continental U.S., pool owners all around the country are taking full advantage of their backyard oases to beat the heat. Those without pools looking to take a dip in the water […]

Read More