Dallas, Texas 05/27/2014 (FINANCIALSTRENDS) – General Motors Company (NYSE:GM)’s customers are now suing the company for as much as US$10B (RM32.1 billion) over the losses in value of recalled cars would now face meager payments if they are told to claim the money from the predecessor, based on the financial-data that has been filed in court. So-called old General Motors had only US$1.1B as of 31 March to pay the existing claims of US$32 billion that it reported yesterday in United States Bankruptcy Court at Manhattan. The company which GM had split from in 2009 has then been liquidating its assets to pay creditors, including the accident victims.
To date, they have received some new General Motors Company (NYSE:GM) stock & warrants at the estimated rate of 30 cents for every dollar claimed, as per the court records. The company after recalling 2.59M cars that had faulty ignition switches is now fighting at least 79 different lawsuits over its economic losses. While accepting the responsibility for injuries, the company has asked the bankruptcy judge to rule that it is not responsible for any price declines in the cars that were made by old GM.
The Bankruptcy Issue
Judge Robert Gerber of the US Bankruptcy court who had handled the automaker’s restructuring & sale of the shares to the US, had ruled in 2009 that this new General Motors would be free from the claims for damages & other liabilities. Even as recently as 2012, he had told a group of the company’s carmaker’s to take all their warranty demands that bankrupt company, where they actually belonged. The car owners say that Gerber’s ruling does not apply to them, as General Motors Company (NYSE:GM) had deceived him about the exact extent of its ignition-switch liabilities. The customer group that had sued the automaker at Gerber’s court said that the GM knew of these switch defects by 2004 & did not fix them, despite the fact that the estimated cost was only US$12 a car.