Chip Bowles Discusses GM’s Recent Bankruptcy Ruling
Despite the recent ruling that largely freed General Motors Inc. (GM) from liability for wrongdoing before its 2009 bankruptcy, GM car owners will still seek billions for the diminished value of recalled vehicles. BGD partner Claude R. “Chip” Bowles Jr. discussed the lawsuit with Bloomberg.
The litigation stems from last year’s recall of cars for faulty ignition switches, which grew to cover GM vehicles for a number of flaws. . Ten million car owners who purchased the recalled cars after the bailout are still seeking $7.5 billion for the diminished value of recalled vehicles because they can claim New GM was to blame for their losses, unlike those who purchased the recalled vehicles from Old GM.
The original lawsuit claimed $10 billion in lost value for 27 million recalled cars, but GM persuaded U.S. Bankruptcy Judge Robert Gerber to keep in place the shield from pre-bankruptcy liabilities that he approved in 2009 to help the carmaker survive.
“The problem is proving whose fault it is,” said Bowles. “If you bought from Old GM, it’s partly Old GM’s fault that your car lost value.”