The Obama administration used the government-managed bankruptcies of GM and Chrysler to boost a key political ally in the unions, but may have left another at the curb — trial lawyers. ABC News looks at the effect that the bankruptcies have on those injured or killed due to defects in GM and Chrysler vehicles. Thanks to the Obama White House, they can only get compensation from the defunct carcasses of both companies, which have no assets left at all:
The 53-year-old Missouri man is one of at least 400 people suing for damages after being hurt or having family members killed in a General Motors or Chrysler vehicle. He is also one of hundreds who, thanks to the government-backed bankruptcy restructuring of GM and Chrysler, don’t know if they’ll ever get their day in court.
“I never thought they would throw us to the side like we weren’t anything,” Cole said.
The order issued late Sunday by the judge in the General Motors bankruptcy case that allowed “old” GM to sell its assets to a “new” GM — part of GM’s efforts to reinvent itself as a lean and competitive company — also allowed the new company to free itself of injury and wrongful death claims filed before bankruptcy proceedings began. An effort to appeal the ruling met with a setback late last night after a judge ruled that such an appeal could not go directly to the 2nd Circuit Court of Appeals — which could result in a speedier resolution — but must be brought before a district court instead.
Under the terms now approved for GM’s bankruptcy restructuring, consumers can still sue the old company, but lawyers for the accident victims say they expect that the “old GM” — the company charged with liquidating any assets not inherited by the new GM — won’t have the cash needed to meet their claims.
Of course they won’t; that’s the entire point. The government rescued the unions by pumping tens of billions of dollars into the automakers which taxpayers will never recover. They forced investors in GM and Chrysler either to accept much less compensation than the unions despite holding more debt and having senior positions on the books, costing them billions they won’t recover. Now Obama has told those who suffered serious injuries or the families of those who died in allegedly defective vehicles that they’re going to have to sacrifice their right to their day in court, too.
The only people not sacrificing here seems to be the unions themselves, and the Obama administration.
And if you think GM got a good deal, take a look at Chrysler:
The bankruptcy proceedings for fellow struggling automaker Chrysler, which concluded June 10, provided that company the same benefit and more: In Chrysler’s case, the judge ruled that the car company that emerged from bankruptcy is off the hook for liability claims related to any Chrysler car manufactured before the bankruptcy proceedings, even if the claims are filed after the bankruptcy.
That means that someone injured in a Chrysler car next week, for instance, couldn’t sue the company if they bought their car before June.
GM tried to get this deal, but lost on that point. However, for all practical purposes, they have it anyway. Those suits will get filed against the rump GM that the bankruptcy creates, which will have nothing but debt up to its ears. Even if people sue and win, they’ll get nothing but a junk bond in return.
Quick — let’s ask the White House if they’re going to push through tort reform, too. After all, that would be fairer to plaintiffs than just declaring entire companies immune from accountability for their products.