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

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GM Asbestos Claimants Seek Formal Panel in Bankruptcy