Charlottesville Personal Injury Lawyer - Bankruptcy

New GM Accepts New Product Liability Claims

Greg Webb — Mon, 20 Jul 2009 08:00:00 GMT

In a bid to win court approval for a quick sale from bankruptcy, General Motors Corp. (GM) has agreed to accept liability for future product defects. Additionally, GM stated that it would change the terms of its proposed asset sale to address the objections raised by twenty suppliers and was working to create a “consensual” agreement regarding the future of a joint-venture plant with Toyota. These statements by GM demonstrate how the auto manufacturer and Obama administration officials have worked to counter some of the more controversial issues raised by the company’s bankruptcy filing. A group of nine state attorney generals, for example, voiced opposition to GM’s reorganization because it would have robbed consumers of protection against product defects under state legislation.

By August, under the GM reorganization plan, a new company would be created to buy the company’s best assets out of bankruptcy. This new company would be 60 percent owned by the federal government, 17.5 percent by the United Auto Workers union and 11.7 percent by the Canadian government and the province of Ontario. The consumers who have lawsuits pending against GM have objected to the reorganization plan since those injury and wrongful-death claims would have to be paid from the sale of GM’s most worthless assets. They further claim the automaker’s insurance would only cover product liability claims of up to $35 million per claim. This amount would not cover the claims of almost any of the lawsuits since many of the cases involved “devastating injuries” from alleged automobile defects.

GM has agreed, however, to continue paying “lemon law” claims so consumers would be entitled to a refund or replacement for defective vehicles. GM has also stated that the reorganized company, which will be nationalized with a $50 billion investment from the United States Treasury, will assume liability for future product defect claims as well.

While it is a good thing that GM will be back in business as (the New GM), it is a tragedy that there are thousands of product liability claims, including those for asbestos-related illnesses, that will effectively be kicked to the curb. All claims that existed before the "reorganization" are likely never going to be paid anything close to acual value. All of those that fall into this latter group probably feel as if the justice system has failed them. I am not sure how I could argue differently at the present time.

Originally posted at InjuryBoard by Greg Webb

GM Asbestos Claimants Seek Formal Panel in Bankruptcy

Greg Webb — Fri, 19 Jun 2009 13:37:39 GMT

Asbestos-injury claimants have asked for an official committee in the General Motors bankruptcy case, saying that the plan to sell the corporation might be unconstitutional since they’ve been excluded from the negotiations.

Lawyers for the claimants stated in a filing with the U.S. Bankruptcy Court in New York that the authority to approve GM’s plan to sell its assets would be limited without the participation of future asbestos claimants. The filing argued that there are due process concerns that limit the court’s ability to enter an order binding the rights of unknown future claimants in a reorganization of which they are unaware and in which they have not been appointed a legal representative.

Creditors are fighting the spinoff of Chrysler LLC’s core business to a new company owned 20 percent by Fiat SpA. Detroit-based GM has said in regulatory filings that its liability for asbestos-related legal claims was $648 million in 2008 and $637 in 2007. The claimants’ filing said that the magnitude of GM’s asbestos liability has been public knowledge and should have been considered by both the auto corporation and the Auto Task Force in their restructuring activities. Spokeswoman for GM Europe Karin Kirchner declined to comment.

The U.S. Trustee appointed an official committee of GM’s unsecured creditors last week, including two people suing GM for asbestos exposure and product liability. The automaker filed for Chapter 11 protection on June 1. Under U.S. bankruptcy law, companies with asbestos-related liabilities can funnel legal claims into a trust, although lawyers’ bills and costs of official committees in bankruptcy cases are paid by the company.

The GM case is In Re General Motors Corp, 09-50026, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Originally posted at InjuryBoard by Greg Webb

Most Bankruptcies Caused by Medical Bills

Greg Webb — Sun, 14 Jun 2009 22:27:50 GMT

A study recently published online in The American Journal of Medicine reports that nearly two out of three bankruptcies are caused by medical bills. This report likely understates the problem, because the data was collected prior to the current economic crisis. Researchers at Harvard Law School, Harvard Medical School, and Ohio University surveyed 2,314 randomly-selected bankruptcy filers during early 2007, discovering that medical problems contributed to 62.1% of all bankruptcies. This proportion represents a 50% rise since 2001.

The authors noted that the financial strain from medical bills affects middle-class families as well as the poor and uninsured. Among families bankrupted by medical bills, those with private insurance averaged bills of $17,749, while uninsured families faced an average of $26,971. Those families who had health insurance but lost it during their illness reported average bills of $22,568. About half of these expenses were hospital costs, followed by prescription drugs (18.6%), doctor’s bills (15.1%) and insurance premiums (4.1%), with medical equipment and nursing home care at the bottom of the list. Neurological problems left patients with the highest out-of-pocket expenses at $34,167, followed by diabetes, injuries, strokes, mental illness, and heart disease.

Originally posted at InjuryBoard by Greg Webb

Supreme Court To Consider Bankruptcy Court’s Power Due To Asbestos-Related Lawsuits

Greg Webb — Mon, 05 Jan 2009 08:00:00 GMT

The Supreme Court has agreed to consider reinstating a $500 million settlement of asbestos-related lawsuits against the Travelers Company Inc.. This settlement would prevent any further lawsuits from being filed against Travelers arising out of the company’s extensive relationship with Johns Manville Corp., which was once the world’s largest producer of asbestos.

Asbestos was used in the 1970s for insulation and fireproofing material. According to federal health agencies, exposure can increase the likelihood of lung cancer, mesothelioma and other health ailments. Travelers Company Inc. has been named in numerous lawsuits claiming it tried to conceal the dangerous health effects of asbestos. The company has argued that the lawsuit claims should come from a trust set up by Johns Manville in the 1980s, which was approved by a federal bankruptcy judge; money for the trust came largely from insurers. Travelers agreed to settle with several plaintiffs as long as federal courts made it clear that they would not face similar lawsuits in the future. The 2nd United States Circuit Court of Appeals in New York reversed lower-court approval of the agreement, stating a bankruptcy judge does not have the authority to act so broadly. In March, the justices will consider the question of the bankruptcy court's power.

Originally posted at InjuryBoard by Greg Webb