General Motors Co (NYSE:GM) will not have to face dozens of lawsuits accusing it of concealing an ignition-switch defect that has been blamed for more than 200 deaths and serious injuries, a U.S. bankruptcy judge ruled on Wednesday.
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Plaintiffs in the lawsuits said the company violated their constitutional rights by failing to disclose the defect, while GM had argued it was protected from claims on vehicles pre-dating its 2009 exit from Chapter 11 bankruptcy.
The decision by U.S. Bankruptcy Judge Robert Gerber means GM may avoid potentially billions of dollars in liability, as well as the cost of defending those lawsuits, although claims arising after its bankruptcy will not be affected. The plaintiffs will have to file their claims instead against the financially limited “Old GM,” the shell company comprised of bad assets GM shed in bankruptcy.
The claims center on a faulty ignition switch in some older vehicle models that could slip out of position, cutting power to brakes, steering and airbags. Last year GM recalled 2.6 million vehicles with the switch, and later issued a series of additional recalls for other safety issues. The defect was linked to nearly 160 injuries and 84 deaths.
The claims mostly allege loss in vehicle value, as GM has already agreed to compensate most injury and death claimants through a separate fund. However, some personal injury and death claimants who were not compensated through the fund are among those now suing the company.
GM shares rose 45 cents to $37.39 in after-hours trading following the decision.
(By Jessica Dye and Nick Brown; Additional reporting by Jonathan Stempel; Editing by Christian Plumb and Ted Botha)