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Questions About Automakers’ Liability Arise During Bankruptcy Process

Bloomberg News reports, “Plaintiffs in personal-injury and product-liability lawsuits against Chrysler LLC and General Motors Corp. are pressing members of Congress to ensure that their cases will be heard in court or an alternate form of compensation is found.” Now, “consumer groups are appealing a New York bankruptcy court’s decision on Chrysler, saying it relieves the new company of responsibility for old losses.” Clarence Ditlow, executive director of the Center for Auto Safety, said, “Either the bankruptcy system has to take care of victims or the Obama administration needs to come up with a victim’s fund much as we did in 9/11.” In addition, “plaintiffs’ lawyers in the Chrysler case objected to the sale of the company’s assets because ‘they may suspect that there won’t be any money left, even if they were to win their cases.'”

CNN’s Situation Room with Wolf Blitzer details some stories of plaintiffs injured by vehicles whose lawsuits have been put on hold due to the bankruptcy. The plaintiffs are looking for a fund to be established that will help pay the money they are due. In a segment on NPR’s (6/3) All Things Considered, the story was also covered.

MSNBC contributes to the coverage with personal stories of people who will be affected by GM and Chrysler’s bankruptcy. “There are other victims who are not as visible: the customers who were injured in defective vehicles made by these companies.” Consumer groups are outraged because “when a company reorganizes under Chapter 11 protection, it can shed negative assets and break free of past obligations, such as lawsuits.” In addition, at present, “all GM lemon law claims are on hold until the bankruptcy court decides how the company should handle them.” Weisbaum says, “The Obama administration’s Auto Task Force and the bankruptcy judges must prevent these companies from shirking their moral obligation.”

ABC World News (6/3, story 5, 2:30, Gibson) reported that bankruptcy attorney Barry Bressler said, “The government seems to be pushing this through to streamline the procedure to the point where individual’s rights may really be minimalized.”

The Philadelphia Inquirer reported, “Once the restructured companies emerge, all the legal protections that consumers rely on, including their ability to enforce warranty claims by invoking state ‘lemon laws,’ will apply to cars or trucks that the ‘new Chrysler’ or the ‘new GM’ sell.” The Obama administration said it would “stand behind both automakers’ warranties.” Even so, “consumers who buy a new Chrysler or General Motors vehicle today, or who bought vehicles before or since the companies filed for bankruptcy, may enjoy fewer protections and face some extra risks, according to consumer advocacy groups such as Consumers Union and the Center for Auto Safety.” Clarence Ditlow, executive director of the Center for Auto Safety, said, “The immediate impact on the consumer is that if you have a pending product-liability lawsuit, or if you’re in a crash tomorrow that gives rise to a product-liability lawsuit, your claim is extinguished – you’re not going to recover.” The Washington Times also ran the story.

From the American Association for Justice news release.

Bob Kraft

I am a Dallas, Texas lawyer who has had the privilege of helping thousands of clients since 1971 in the areas of Personal Injury law and Social Security Disability.

About This Blog

The title of this blog reflects my attitude toward those government agencies and insurance companies that routinely mistreat injured or disabled people. As a Dallas, Texas lawyer, I've spent more than 45 years trying to help those poor folk, and I have been frustrated daily by the actions of the people on the other side of their claims. (Sorry if I offended you...)

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