On April 24, 2017, the US Supreme Court refused to review GM's appeal in which the automaker asked the court to review a 2016 federal court ruling that said the automaker was liable for injuries and deaths related to faulty GM ignition switches despite filing bankruptcy in 2009 and re-emerging as a new company.
Chapter 11 bankruptcy is intended for a company to use to reorganize, according to attorney Ben Stewart. "The result of the reorganization does not produce a new company. In its simplest form, the Supreme Court upheld this principal, Stewart says.
”The Appeals Court ruled that the bankruptcy code doesn’t shield GM from liability. This is because the company knew about the flaw before the bankruptcy was filed," says Stewart. "GM waited to tell owners about the defect until after the Bankruptcy filing. As a result, innocent and trusting customers of GM were injured and killed so the company could save money."
In 2014, GM began recalling several car makes and models that contained potentially faulty ignition switches. The defective ignition switches could potentially turn off by themselves, causing the engine to shut down and disabling airbags while the car was still in motion.
GM ignition switches have been linked to numerous injuries and deaths. Currently, around 30 million cars have been recalled, according to ConsumerSafety.org.
The US Supreme Court's refusal to review GM's appeal could expose General Motors to "billions of dollars in additional claims," according to The Detroit News.
The GM ignition switch recalls and ensuing legal battles have already hit the automaker hard. According to the New York Times, GM paid $900 million to settle a federal criminal investigation and set aside $594.5 million for a fund to compensate victims of switch-related crashes.
According to the New York Times: "Over the last few years General Motors has paid out more than $2 billion in fines, penalties and settlements related to faulty ignition switches that plagued many of its vehicles for close to a decade, a flaw that led to vast recalls and at least 124 deaths.
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Since the US Supreme Court declined to review the appeal, the automaker could now be exposed to lawsuits claiming that GM was liable for injuries and deaths due to defective ignition switches prior to GM filing bankruptcy in 2009.
GM acknowledged in 2014 that its engineers were aware of problems with ignition switches in the Chevrolet Cobalt and Saturn Ion for years before the automaker began recalls for affected models. With its recent appeal, GM hoped to protect itself from potential lawsuits related to the ignition switches.
"The defective ignition switch killed at least 124 people and injured at least 340 more," says Stewart. "The fact that the GM is trying to avoid liability is unconscionable."