GM Will Defend Vehicle Defects Lawsuits

June 2009

General Motors Corp. has agreed to defend lawsuits brought by people injured in car accidents believed to be caused by vehicle defects after the company emerges from U.S. bankruptcy protection. Under its original bankruptcy plan, the automaker planned to renounce liability in such situations.

A dozen state attorneys general and several consumer advocacy groups objected to GM's first plan, which would have rendered car accident victims unable to sue the new GM. Instead, they would have been considered unsecured creditors, forced to make claims against GM's old bankruptcy estate, which would have resulted in little or no compensation.

Car accident victims with pending lawsuits, people who won damages against General Motors before it filed for bankruptcy, and those who are in accidents while the company is under bankruptcy protection will still be unable to bring claims against the new GM. They will remain with other unsecured creditors making claims against the old GM. Attorneys general are expected to keep fighting for the new GM to take on those liabilities as well.

A committee representing car accident victims who have sued General Motors said there are more than 300 people with personal injury claims in excess of $1.25 billion.