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Bankruptcy Trust Seeks To Avoid GM Ignition Switch Claims

A bankruptcy trust for the automaker’s creditors is asking a federal judge to reject GM ignition switch claims. The trust, appointed to act on behalf of the creditors from the company’s 2009 bankruptcy, alleges that the funds used to pay the GM ignition switch claims should be allocated to the trust. Attorneys for the trust state that the funds paid out by the “new GM” that emerged from bankruptcy should be used to pay the debts of the “old GM”.

GM Ignition Switch Claims vs. Bankruptcy Trust

The battle over the GM ignition switch claims stems from the potential differences between the pre-bankruptcy “old GM” and the “new GM” that emerged in 2009. The post-bankruptcy version of the company, under the leadership of Chief Executive Officer Mary Barra, has taken the lead on paying out the GM ignition switch claims related to the defective part. However, most of the 2.6 million vehicles under recall were made prior to 2009, and would fall under the “old GM” regime.

“Old GM” Contests GM Ignition Switch Claims

In a brief filed with the bankruptcy court this week, attorneys for the bankruptcy trust stated that “only New GM could be liable for the economic injuries” stemming from the GM ignition switch claims. The brief also attempted to clear the previous version of the company from the ongoing GM ignition switch claims, stating that the company did not receive any notice of the issue “until five years after” the company filed for bankruptcy.

Not All GM Ignition Switch Claims Covered

The “new GM” is working with owners of the 2.6 million vehicles on their GM ignition switch claims related to injuries or deaths. Meanwhile, attorneys for the bankruptcy trust noted that the company will not compensate owners for their economic losses due to the decreased resale value of the affected vehicles. The bankruptcy trust also noted that the company will not pay out GM ignition switch claims on more than 13.5 million vehicles recalled with different ignition switch issues.

GM Ignition Switch Claims Could Reach $600M

Since the company announced the recall in February, vehicle owners have filed at least 170 lawsuits seeking billions in compensation. So far, the company has paid out 100 GM ignition switch claims, with 42 of those claims related to fatal accidents and 58 tied to other injuries. Executives have set aside $400 million to pay off these GM ignition switch claims, but that number may rise to as much as $600 million as more claims are processed and approved.

Source: Detroit News

Know Your Rights in a GM Ignition Switch Claims Lawsuit

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