GM bankruptcy terms may limit liability in ignition-related recall lawsuits

General Motors is facing an investigation from the National Highway Traffic Safety Administration over its handling of a recall affecting roughly 1.6 million cars, but the automaker may have found a legal shield from possible future consumer lawsuits. The solution hinges on the old, pre-bankruptcy GM, and the new company that emerged afterward. While the name is the same, on paper they are technically different firms.

According to Automotive News, the company negotiated with state attorneys general and consumer groups during its restructuring to only carry product liability on faults with vehicles from after it left bankruptcy in 2009. If any owners want to sue GM for issues that took place before that time, they would have to take it up with the "old GM" in a bankruptcy court. So far, all attempts to sue the new company for pre-2009 faults have failed.

"It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009," said GM spokesperson Greg Martin to Automotive News.

Because the vehicles affected by the recall were built between 2003 and 2007, covering only claims after 2009 limits the number of possible cases. The current total of incidents related to the ignition switch fault sits at 31 accidents and 13 deaths. The General hasn't revealed when these crashes occurred, but Automotive News claims to know of at least one fatal crash in a Chevrolet Cobalt in December of 2009 that was caused by the airbag not deploying. Even if the automaker is able to limit product liability lawsuits, it's still facing a possible fine from NHTSA that could be as high as $35 million, a new record in the industry.

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