Hawaii Personal Injury Blog - Bankruptcy

Chrysler Bankruptcy Update: Car Giant To Accept More Product Liability Claims.

Wayne Parsons — Fri, 28 Aug 2009 18:47:49 GMT

The AP (8/27) reported, "Chrysler Group LLC said Thursday it will accept product liability claims in a broader number of cases than originally planned in its reorganization under bankruptcy protection. The automaker said it will now consider product-related lawsuits from consumers involved in accidents that occurred after Chrysler emerged from bankruptcy protection in June that involve vehicles manufactured by the old company." Joanne Doroshow, "executive director of the Center for Justice and Democracy, said Chrysler had 'responded to pressure from injured victims and consumer groups and we commend them for taking this important step to protect public safety.'"

The Detroit News (8/27, Shepardson) reported that Chrysler senior vice president for external affairs and public policy John Bozzella said, "While Chrysler Group still faces challenges, we are confident today that the future viability of the company will not be threatened if we assume these obligations." Chrysler "noted its approach is now consistent with that taken by General Motors Co. as part of its bankruptcy process, Chrysler said. But Chrysler will not accept liability for lawsuits filed for incidents filed before June 10."

Bloomberg News (8/27, Rosenblatt) reported that as part of the original bankruptcy agreement, Chrysler had "agreed to assume liability only for cars sold by the newly formed company."

The Wall Street Journal (8/27, Linebaugh) and Reuters (8/27, Bailey) also covered the story.

Originally posted at InjuryBoard by Wayne Parsons

Sad Day For Americans: Judge Allows GM to Escape Payments to Victims of Injury and Death From Defective GM Cars

Wayne Parsons — Wed, 08 Jul 2009 12:33:23 GMT

If the damage done to the American economy, American workers and all of us by the inept and perhaps crooked management at General Motors (GM), The U.S. Treasury and now a federal judge have told these wealthy idiots that they don't have to pay victims of defective GM cars. That's right. Hundreds of injured and dead Americans who have claims against GM for the defective cars the caused their injury or death. Taxpayers will pay for future medical bills and the loss of life will just be tough luck to the innocent victims. For a President who renewed a sense of Justice in his election, President Obama has sided with corporate giants and demonstrated lack of concern for the injured and the poor in the first six months of his Presidency.

This weekend, a bankruptcy judge approved the sale of GM – leaving those currently injured by defective vehicles in the dust. Last week, the courts provided a partial win for GM vehicle owners by saying those injured in a defective vehicle from the date of sale forward can pursue a claim. However, all pending cases are wiped out by the bankruptcy agreement, including current and future asbestos cases.

See my earlier articles on this subject:

Treasury negotiating on GM's product liability.

Judge approves GM asset sale, clearing way for restructuring.

I am encouraging Members of Congress in the House and Senate to restore the rights of people injured by GM and Chrysler. Because legislation will be the only way to ensure everyone has the right to bring a case against Chrysler or GM, HR 3088, the Jeremy Warriner Consumer Protection Act of 2009 has been introduced in the House of Representatives.

Jeremy Warriner lost his legs when he was in a tragic auto accident. Investigators discovered the plastic brake fluid container was defective, and caused a major explosion. Jeremy would have walked away from the accident had it not been for this defect. This bill will require an automobile manufacturer that the Federal Government has an ownership interest in or that has an outstanding loan from the Federal Government to purchase liability insurance from an insurance company, and I will be working hard to get this bill passed. I will keep bringing you progress updates.

Congress continues to consider health care reform following recess with the Senate HELP Committee trying to complete their mark-up this week. National news focuses on this subject. Next week, the House of Representatives will begin considering health care legislation in three committees.

Originally posted at InjuryBoard by Wayne Parsons

Judge approves GM asset sale, clearing way for restructuring.

Wayne Parsons — Mon, 06 Jul 2009 14:29:29 GMT

On the front page of its business section the New York Times (7/6, B1, De La Merced) reports that US Bankruptcy Court Judge Robert E. Gerber "approved a plan by General Motors late on Sunday to sell its best assets to a new, government-backed company, a crucial step for the automaker to restructure and complete its trip through bankruptcy court." Gerber's decision "came after three days of hearings to address the 850 objections to the restructuring plan and after he had received a revised sale order from G.M.'s lawyers. In his 95-page opinion, Judge Gerber wrote that he agreed with G.M.'s main contention: that the asset sale was needed to preserve its business in the face of steep losses and government financing that is scheduled to run out by the end of the week."

The Wall Street Journal (7/6, B1, Spector) adds that Gerber's decision "removes a key hurdle to the auto maker's plan to exit bankruptcy." Gerber "rejected pleas from dissident bondholders and product-liability claimants who objected to GM's plans. The judge said the only alternative to GM's plans would be liquidation, 'a disastrous result for GM's creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates. In the event of a liquidation, creditors now trying to increase their incremental recoveries would get nothing.' The ruling paves the way for GM's government-brokered restructuring, in which the auto maker will move its 'good' assets -- including automotive brands Chevrolet, Cadillac, Buick and GMC -- to a new company owned by the U.S. Treasury. The sale approval clears the way for GM to potentially exit bankruptcy in less than two months."

The Detroit News (7/6, Snell, Shepardson) reports that the move could result in a "stunningly swift emergence from Chapter 11 bankruptcy," noting that "once the sale closes, which is not expected before noon on Thursday, the 100-year-old automaker will be majority-owned by the U.S. Treasury Department. The government will have a 60.8 percent stake after providing more than $50 billion in financial aid to keep the iconic American company from liquidating and becoming perhaps the greatest industrial failure in the nation's history."

I have previously reported on objections to GM's plan by state attorney generals:

State AGs challenging GM's liability plan - by Wayne Parsons

The AP (7/6, Fowler) reports that "attorneys for some of GM's bondholders, consumer groups and individuals with lawsuits against the company argued in court for its rejection, saying that their needs were being pushed aside in favor of the interests of GM and the government. It was unclear early Monday if any of those groups planed to appeal Gerber's decision."

Bloomberg News (7/6, Scinta), MarketWatch (7/6), and Reuters (7/6, Chasan, Allen) also report on Gerber's ruling.

Originally posted at InjuryBoard by Wayne Parsons

Treasury negotiating on GM's product liability.

Wayne Parsons — Fri, 26 Jun 2009 14:26:01 GMT

The Wall Street Journal (6/26, B1, Spector, McCracken) reports on the front page of its Marketplace section, "The U.S. Treasury Department is negotiating with more than a dozen state attorneys general to roll back two key features of General Motors Corp.'s bankruptcy plan that would have wiped out billions of dollars in potential claims from car-accident victims and closed auto dealers." Under the current reorganization plan, "hundreds of car-accident victims have lawsuits against GM in various stages of the legal process that would be effectively washed away." In opposing GM's product-liability plan, "state attorneys general are raising a number of complex legal issues, ranging from the power of federal bankruptcy courts to supercede state law to constitutional due-process rights of Americans to sue GM if they're injured by the auto maker's vehicles in the months and years ahead."

In an informative analysis of the impact of this bailout on people injured in defective automobiles Cecelia Prewett of the American Association of Justice (AAJ) sheds light on this judicial and Congressional problem:

Protecting Consumers in Wake of Chrysler / GM Bankruptcy

GM wins financing, "tort czar" denied. The Detroit Free Press (6/25, Hyde) reported, "General Motors won approval Thursday to use up to $33.3 billion to pay for its bankruptcy, after making a few changes to settle technical objections." US Bankruptcy Court Judge Robert Gerber also "denied a request from an unofficial committee of people with asbestos-related claims against GM to appoint a 'tort czar' that would oversee all future claims against the old GM, not just those related to asbestos."

The Detroit News (6/26, Gardiner) reports that consumer victims and asbestos claimants "withdrew petitions for their own independent bargaining committees on Thursday."

Comcast pulls liability ads. The Washington Post (6/26, Marr, Tse) reports, "Comcast pulled a cable television advertisement criticizing General Motors' bankruptcy plan earlier this week after the automaker challenged the spot's claims. The ad was paid for by a group of people injured in GM and Chrysler vehicles, who say the taxpayer-funded restructurings should not allow the automakers to escape liability claims for injuries or deaths that occurred before the bankruptcy filings."

Originally posted at InjuryBoard by Wayne Parsons

State AGs challenging GM's liability plan.

Wayne Parsons — Mon, 22 Jun 2009 15:49:11 GMT

The Wall Street Journal (6/22, A4, Spector) reports, "Eight state attorneys general are opposing a provision in General Motors Corp.'s bankruptcy plan that would free the auto maker from liability for vehicle defects. Attorneys general from Connecticut, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Dakota and Vermont filed an objection in U.S. Bankruptcy Court in the Southern District of New York Friday, arguing that GM's plan to shed these liabilities would bar accident victims from 'key legal rights.'" The states "could face an uphill battle" as "legal precedent shows that most companies have wide latitude to leave claims behind in bankruptcy court."

McClatchy (6/21, Gelles) reported on the impact of GM and Chrysler's bankruptcies on consumer protections. 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. Ditlow said the Chrysler deal also could undermine provisions, such as double or triple damages, that made some states' lemon laws more effective." McClatchy notes, though, that "some lemon-law lawyers, such as Robert Silverman of Kimmel & Silverman, said Chrysler customers scored a victory because the final deal with Fiat requires the new company to honor warranty and lemon-law claims for Chrysler products made in the last five years."

The Washington Post (6/19, Marr) reported, "Lawyers are scrambling to file paperwork today to oppose the sale of GM's assets. Christine Spagnoli, president of Consumer Attorneys of California, said the automakers' pledge to guarantee warranties, parts and maintenance is misleading to customers." Spagnoli explained, "They're saying, 'If your brakes are bad, we'll fix them. But if you crash and get hurt because your brakes are bad, we don't want to be accountable for that.'"

The Detroit News (6/22, Guthrie) reports, "John Pottow, a University of Michigan law professor and bankruptcy expert, was returning Thursday from a conference in New York, where he said General Motors lawyers gave him the impression they are still considering how to proceed." Said Pottow, "What's fascinating about this is that it is the government taking the hard line here, insisting that the new company should emerge free of those liabilities. It's the government actually thinking like hardheaded investors instead of taking the more predictable, more socialist line." Critics "are lobbying to establish government-supported victims' compensation funds." One expert noted, "There is a lot of discussion in Washington about compensation funds, which happens frequently in cases like this. ... When you have products that have and will continue to kill people, there are funds set up for victims."

Originally posted at InjuryBoard by Wayne Parsons

Questions about automakers' liability loom during bankruptcy process.

Wayne Parsons — Thu, 04 Jun 2009 08:53:47 GMT

Bloomberg News (6/4, Andersen) 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 (6/3) 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 (6/4, Weisbaum) 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 (6/2, Gelles) 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 (6/4, Prudy) also ran the story.

GM CEO wants tax payers to get "fantastic return on this investment." ABC News (6/1, Gomstyn, Jaffe, Herman) reported, "As the country's largest automaker works to emerge from its newly-declared bankruptcy, it will aim to make money for the U.S. taxpayer, General Motors CEO Fritz Henderson told ABC News today." He said, "I want them to get a fantastic return on this investment." He added, "It's our job to deliver that."

Creditor committee includes two plaintiffs. Bloomberg News (6/3, Larson) reported, "Bankrupt General Motors Corp.'s official committee of unsecured creditors includes the United Auto Workers union, owed $20.6 billion; Wilmington Trust Co., representing bondholders owed $22.8 billion; the Pension Benefit Guaranty Corp. and three GM dealerships." The committee was "selected today by U.S. Trustee Diana Adams" and includes "two lead plaintiffs from asbestos and product liability cases pending against the bankrupt automaker were also appointed to the committee."

Originally posted at InjuryBoard by Wayne Parsons

Consumer groups, trial attorneys criticize GM, Chrysler bankruptcy plans.(2)

Wayne Parsons — Wed, 03 Jun 2009 08:08:52 GMT

The Hill (6/3, Swanson) reports, "Consumer groups and trial lawyers are crying foul over the Obama administration's bankruptcy plans for General Motors and Chrysler" because "those plans would extinguish all ongoing auto accident claims that blame a death or serious injury on a defective GM or Chrysler vehicle." According to Clarence Dilow, executive director of the Center for Auto Safety, "the plans are unusual in that they would prevent anyone from bringing a future liability claim against GM or Chrysler if a car already purchased from either company is defective and results in an accident causing death or serious injury." Also, he added, "it was...unusual for no money to be set aside for liability claims."

On the Wheels blog on the New York Times website (6/3) Christopher Jensen writes, "In approving the sale of most of Chrysler's assets to a new company, run by Fiat, over the weekend, Judge Arthur J. Gonzalez also granted the automaker's request that the new company not be held liable for future product-liability problems involving current owners" which "means people who own a Chrysler, Dodge or Jeep have lost their right to sue if they are injured by a safety defect." He says that consumer groups are concerned that "people who already have been injured in accidents and have filed suits against Chrysler, asserting that a vehicle had a safety defect" will not get any money from the carmaker even if they "win in court."

ClickonDetroit (6/3) also covers the story and reports, "It's like slamming the courthouse door in the victim's face." Consumer groups want the "new Chrysler" to "at least create a victim's fund."

Originally posted at InjuryBoard by Wayne Parsons

Consumer groups, trial attorneys criticize GM, Chrysler bankruptcy plans.

Wayne Parsons — Wed, 03 Jun 2009 08:08:45 GMT

ClickonDetroit (6/3) also covers the story and reports, "It's like slamming the courthouse door in the victim's face." Consumer groups want the "new Chrysler" to "at least create a victim's fund."

Originally posted at InjuryBoard by Wayne Parsons

As GM declares bankruptcy, Obama moves to reassure consumers.

Wayne Parsons — Tue, 02 Jun 2009 09:18:49 GMT

Media outlets last night and this morning focused much of their coverage of GM's bankruptcy on the government's 60% stake in the company, and on President Obama's assurances that he wants the Federal role in GM to be temporary. In addition to generating extensive cable commentary and front-page headlines across the nation, GM's descent into bankruptcy led all three network newscasts, which devoted a combined 19 minutes and 40 seconds to the story. The CBS Evening News (12/6, lead story, 3:45, Couric) noted that GM is "now owned largely by you and me, the taxpayers." The Federal government "will take a 60% ownership stake, and the goal is to have it out of bankruptcy within 90 days." The President "sounded a bit like salesman-in-chief today -- telling Americans 'if you're considering buying a GM car, your warranties will be backed by the government.'" CBS (Mason) showed Obama saying, "Our goal is to get GM back on its feet, take a hands-off approach and get out quickly."

The New York Times (6/2, A1, Vlasic, Bunkley) reports on its front page that "Obama said the government would take a hands-off approach to managing G.M., and would divest its stock in the company as soon as it could. But that is likely years away." The Times notes that "once G.M. has finished cutting jobs, brands and models, it could fall behind Ford in terms of sales."

Chamber opposes government ownership of GM. The Financial Times (6/2, Braithwaite) reports that "the US Chamber of Commerce, the biggest business group, came out strongly against government ownership on Monday, arguing that there were already examples of undue state influence and 'clear examples of market manipulation and protectionism' at GM and Chrysler." Chamber's Thomas Donohue said "he was worried about 'the potential for governments and unions to influence production, product, workforce, and management decisions in ways that could jeopardize the automakers' chances for survival.'"

Chrysler deal approved by bankruptcy judge, Fiat protected from liability suits. The Detroit Free Press (6/1, Gardner) reported, "Chrysler's transformation from bankruptcy to a new company owned by Fiat, U.S. and Canadian taxpayers and UAW retirees, whose health care benefits could shrink in coming years, has been approved by U.S. Bankruptcy Judge Arthur Gonzalez." However, "Fiat will be protected from any product liability lawsuits arising from alleged flaws in Chrysler vehicles sold prior to the sale's closing later this month. Anyone filing such lawsuits will only be able to recover from the limited assets of the old company."

Originally posted at InjuryBoard by Wayne Parsons

Lawyers Voice Objections to Chrysler Bankruptcy Plan.

Wayne Parsons — Fri, 22 May 2009 17:24:22 GMT

The Detroit News (5/21, Priddle, Shepardson) reported, "A flurry of objections in the Chrysler LLC bankruptcy case continue to be filed in advance of a hearing next week to approve a tie-up with Fiat SpA." A motion was filed by attorneys for "Public Citizen and other plaintiffs...seeking to prevent Chrysler from dropping personal injury lawsuit and product liability claims in bankruptcy." In addition, they "argue that the inability to sue over vehicle problems could drop the resale value of Chrysler vehicles."

Injured customers speak out on potential terms of Chrysler bankruptcy. ABC-TV (5/21, Stark) reported that lawyer "Scott Nealey...fears that the terms of Chrysler's bankruptcy proceedings may mean the lawsuit" by his client against the car company "could get thrown out." His client, Farbod Nourian "is speaking at a news conference designed to put pressure on the government to ensure he and others like him do not lose their day in court." Nealey said, "Chrysler has asked for the sale to be free and clear." He added, "They take all the assets and they have no obligations to people who have Chrysler vehicles right now. So if you have a design defect with Chrysler and it is something the company would normally fix, or you have a personal injury, you would be left with no remedy whatsoever."

The Indianapolis Star (5/21, Mcfeely) reported, "Jeremy Warriner's legal battle against Chrysler -- over an accident that cost him his legs -- seemed about to end this month." However, "just six days before a May 5 mediation date in his personal injury case, the struggling company filed bankruptcy under a plan brokered by the Obama administration -- a plan that could prohibit Warriner and hundreds of others from pursuing legal claims." He plans to testify against those terms "before the House Judiciary Committee in Washington." He said, "My message is that people who have been injured deserve the opportunity to face Chrysler in court or in mediation."

Originally posted at InjuryBoard by Wayne Parsons