Chrysler decision bodes well for GM claimants


Published: Lawyers USA, December 15, 2009

The Supreme Court’s decision Monday not to review Chrysler’s bankruptcy may turn out to help GM product liability claimants who were left in the lurch.

The justices on Monday turned down an appeal from the state of Indiana pension funds that earlier challenged the automaker’s bankruptcy proceedings. Most of Chrysler’s assets were sold to Italian automaker Fiat.

The court sent the challenge filed by the Indiana pension funds - which held debt in the old Chrysler - back to the 2nd Circuit and ordered the court to dismiss the challenge as moot.

The Supreme Court’s order, while leaving the Chrysler sale undisturbed, vacated the 2nd Circuit’s June ruling that affirmed the manner in which Chrysler’s assets were sold.

Attorney Steven Jakubowski, author of the Bankruptcy Litigation Blog, said the ruling means that the Chrysler opinion “stands alone, and is one of those unique situations that has no precedential value in the normal commercial bankruptcy world.”

That’s good news for Jakubowski, who is representing tort claimants in the General Motors bankruptcy.

GM has agreed to accept liability for future product liability claims after protests by consumer groups and state officials who threatened to block the sale of most of the automaker’s assets in a bankruptcy plan.

But personal injury victims with pending claims are still dissatisfied. Under the new bankruptcy plan, “New GM” will not assume liability for pending claims, forcing those people to seek compensation from “Old GM.”

Tort claimants are appealing their case to U.S. Bankruptcy Judge Robert Gerber in New York, who approved the sale of most of GM’s business to a U.S. Treasury-funded buyer on July 5.

“This has a huge impact on my case,” Jakubowski said. “Now my argument is that there’s no law in the 2nd Circuit on this issue - let’s look at it de novo.”

As for Chrysler product liability claimants who had claims pending before the bankruptcy, “there are no appeals. Case closed,” Jakubowski said.

-Nora Lockwood Tooher