In its effort to emerge from bankruptcy, the New GM has agreed to accept liability for some product liability claims. The New GM, like Chrysler before it, obtained a release from liability for all claims arising from GM manufactured vehicles prior to the company emerging from bankruptcy. This means any party injured by a GM manufactured vehicle prior to July 10, 2009, must seek damages from the liquidated assets of the old GM. Given the considerable debt which led GM to file for bankruptcy protection, this means injured parties will be unlikely to recover any damages.

The New GM, however, went a step further than Chrysler when it agreed to accept liability for any injuries caused by GM vehicles after July 10^th. Conversely, the bankruptcy plan which allowed Chrysler to emerge from bankruptcy limited the new company’s liability to defects caused by vehicles manufactured by the new Chrysler. As a result, if you are injured by a vehicle manufactured by the old Chrysler, your only recourse is against the old Chrysler which, like the old GM, has considerable debt and a long list of creditors. GM originally sought similar protection but later relented after pressure from consumer advocacy groups. Although some, including consumer advocacy groups are dissatisfied with the outcome, barring a change in the bankruptcy code by Congress, the bankruptcy laws acted as intended. Much like individuals seeking a fresh start, the new auto companies were able to emerge from bankruptcy without the old debt and liabilities which would have eventually caused them to go out of business. Whether fair or unfair, the same protection is available to individuals who are seeking a fresh start by filing for individual bankruptcy protection.

- Richard V. Stokan, Jr.