States Attorneys General File Objections to GM Bankruptcies

The states have begun to clamor for their rights in the dissolution of the old General Motors, filing a joint objection to the bankruptcy provision allowing the automaker to eliminate tort claims.

Following the path set by the Chrysler bankruptcy and sale to Fiat, GM has sought protection from liability claims for deaths and injuries that occur in vehicles manufactured before the bankruptcy. Eight states attorneys general, from Connecticut, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Dakota and Vermont filed an objection with the U.S. Bankruptcy Court in New York on Friday. Illinois, California, Kansas and Ohio have joined the objections.

The states, which will eventually shoulder the financial burdens of permanently injured victims of automotive defects, argue that the bankruptcy court overstepped its legal authority in granting the elimination of successor liability. More to the point, the attorneys general have called out this provision as an evisceration of states’ rights:  “…these offensive provisions, taken as a whole, divest consumers of substantial legal rights, without any regard for state laws that may, when a claim is eventually made, be read to hold otherwise.”

To the average consumer, the new General Motors will be indistinguishable from the old General Motors with a critical exception:

“To allow Newco to purchase substantially all of the Debtors’ assets, continue in the manufacture and sale of GM vehicles, enjoy the good will that comes along with the purchase of the GM name and brand, and still avoid any claims brought against it on the theory of successor liability contrary to state law is an unconscionable and wholly insupportable result that will harm innocent consumers.”

So far, in a Detroit News story, the automakers pulled the linings out of their corporate pockets and shrugged. Chrysler said that it was “saddened” that consumers had been injured in their vehicles and GM says that it feels consumers’ pain. Neither seemed inclined to stand behind their products or contemplate the challenges on some future sales floor when enough consumers figure out the raw deal that awaits.

Other states are expected to formally join the objection.

Joinder and Limited Objection of the States of Connecticut, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Dakota and Vermont 06/19/09

The States of Illinois, California and Kansas join the Joinder and Limited Objection of the States of Connecticut, et al. 06/19/09

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