GM Seeks Delay of Suit Pending New Bankruptcy Court Ruling

General Motors Co. (GM) asked a federal court in California to delay a lawsuit over faulty cars until a bankruptcy judge rules whether such claims can be brought without violating a sale order in its 2009 Chapter 11 case.

A judge’s order approving GM’s sale, which allowed the new GM to come out of bankruptcy with government aid, let the company reject the liabilities of old GM, including claims for damages and those based on design defects, the automaker said in the filing in San Francisco on April 11. The lawsuit filed by Galdina Maciel doesn’t acknowledge the bankruptcy court ruling, GM said.

“The Maciel Plaintiffs seek economic damages, premised on the allegation that the vehicles they purchased or leased were ‘prone to fail’ due to a variety of design defects associated with the ignition switch itself,” GM said in the filing.

GM is facing at least 36 related lawsuits, some from people with similar claims to Maciel. The automaker said it will soon ask the U.S. Bankruptcy Court in Manhattan to enforce the injunction in the sale order that bars anyone from suing it for claims that it rejected in bankruptcy.

“They’re trying to hide behind bankruptcy to keep from fixing the cars the way they should be fixing them,” said Lance Cooper, a Marietta, Georgia-based attorney helping represent the Maciel plaintiffs.

After recalling 2.59 million cars with ignition problems linked to 13 deaths, the automaker, founded in 1908, must tackle its biggest challenges since its 2009 bankruptcy, ranging from lawsuits to regulators’ probes on why it waited a decade or more to fix the faults.

GM took on only limited warranty obligations for old GM’s cars, which it is fulfilling by repairing recalled vehicles, it said.

The case is Maciel v. General Motors, 14-cv-01339, U.S. District Court Northern District of California (San Francisco).

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Patrick G. Lee in New York at plee315@bloomberg.net

To contact the editors responsible for this story: Joe Schneider at jschneider5@bloomberg.net Peter Blumberg

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