(Bloomberg) -- General Motors Co. can’t be sued over matters that came before its 2009 bankruptcy, but may face claims over later actions tied to cars made before the automaker’s government bailout, a judge ruled.
The question of GM’s so-called bankruptcy shield arose as part of the recall of millions of cars with defective ignition switches. The carmaker had argued that the 2009 bailout created a new company free of successor liability for the acts of “Old GM.”
Gerber sided with the Detroit-based company on the question of pre-bankruptcy liability, while opening the way for “otherwise viable claims against New GM for any causes of action that might exist arising solely out of New GM’s own, independent” acts after the reorganization.
At least 74 people were killed when GM cars suddenly turned off after the ignition was jostled. More than 2.59 million vehicles have been recalled for just one type of switch defect. Affected car owners who weren’t injured sued Detroit-based GM, seeking compensation for their vehicles’ loss in value.
The ruling allows lawsuits claiming as much as $10 billion for GM’s failure to warn about unsafe ignition switches to proceed. The motorists still have to prove their cases to get any money.
The shares rose more than 2 percent at about 5 p.m. New York time, after the close of regular trading.
The case is In re Motors Liquidation Co., 09-bk-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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