General Motors Seeks to Void Pre-Bankruptcy Warranties

The new General Motors, which has emerged from bankruptcy, says it shouldn’t be responsible for the old company’s warranty problems, Consumer Affairs reports. Consumers have experienced suspension problems in Chevrolets from the 2007 to 2008 model year, but the carmaker filed a petition to court to dismiss a class action lawsuit filed over 400,000 vehicles.

A woman from Blakely, Pennsylvania, filed the lawsuit June 29 against General Motors arguing that her Impala was defective and the rear spindle rods caused the tires to wear out after 6,000 miles. The lawsuit points out that police vehicles, which are commonly the Chevrolet Impala, were repaired by GM.

Unfortunately for consumers when GM filed for bankruptcy in 2009 it was allowed to forgo any responsibility to consumers who had been injured and for car repairs such as the defective spindle. Plaintiffs in a bankruptcy are grouped with other unsecured creditors so they are the last in line to receive whatever is left of the old company. While this happens in bankruptcy proceedings it has never happened to the level it happened in the bankruptcies of GM and Chrysler.

Under bankruptcy law GM was allowed to throw off its liabilities while at the same time automakers GM and Chrysler received more than $17 billion in bailout money from taxpayers, the same people who are waiting to have their defective automobiles fixed. The New GM would not pick up the liability for defective designs, bad decisions or alleged breaches of liability under the warranty, except for cars made after the bankruptcy date.

Consumers were thrown under the bus, but the car company survived and thrived. Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.

Unfortunately under bankruptcy law, the New GM may be able to shake off its creditors and liabilities in order to move forward. The motion was filed in U.S. District Court in Detroit and it will be up to the judge there to decide if the New GM has any liability for the 400,000 vehicle owners who are having problems with their defective automobiles.

Sources: http://www.consumeraffairs.com/news04/2011/08/gm-voids-pre-bankruptcy-warranties.html and http://www.reuters.com/article/2011/08/19/gm-impala-lawsuit-idUSN1E77I0Z820110819

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