An unusual meeting took place this week at a law office high in a Times Square skyscraper. Lawyers from about 100 law firms participated, either in person or by phone. The agenda: solidifying a strategy for taking on General Motors in bankruptcy court.
Less than five months after declaring the era of “Government Motors” over and done with, the new GM, which just completed its 17th consecutive profitable quarter, will be back before Judge Robert E. Gerber in the U.S. Bankruptcy Court of the Southern District of New York Friday, girding for a new fight.
On the surface, GM is merely asking the judge to enforce a provision of its July 10, 2009, bankruptcy reorganization that insulated the “new” company from lawsuits stemming from accidents that occurred before that date.
But the reason for the request is far from routine. The company is trying to shut down a rising tide of class-action lawsuits stemming from its recall of 2.6 million cars because of a dangerously defective ignition switch that it now links to 13 deaths. Asking a judge to enforce part of a restructuring happens in many bankruptcy cases. But in this situation, some bankruptcy experts say, it may be a risky move. Objections have poured into the court from plaintiffs in cases around the country alleging that the company committed fraud during the bankruptcy proceedings five years ago by not disclosing the potential liabilities from the faulty switch, a problem it now admits was known in parts of the company for more than a decade before the recall.