Victims of Defective Autos Manufactured By Bankrupt Manufacturers May Not Be Compensated.

by Friedman & Ranzenhofer, PC on July 18, 2011

in Buffalo Defective Products - Product Liability

The Chapter 11 bankruptcy of automakers GM and Chrysler resulted in sales of many of their assets to the U.S. Government and Fiat, respectively, approximately two years ago.  Their bankruptcy, however, is still having an impact on Buffalo residents pursuing a personal injury lawsuit against either of these manufacturers.

Usually, an individual who has been injured as a result of a defect in the design or construction of a motor vehicle may sue the manufacturer.  Pursuing and actually obtaining compensation for an injury, however, has become much more difficult for those who initiated a lawsuit involving an automobile manufactured by GM or Chrysler prior to the conclusion of the bankruptcy proceedings.  This is because the sale of the company’s assets were allowed to proceed clear of any encumbrance for prior debt incurred as a result of product liability claims.  In other words, the new owners would not be required to pay any debt arising from old product liability claims.

This decision applied even to lawsuits that had been concluded and the victim was simply awaiting payment from the company. 

Following protests by several members of Congress, the new owners of both companies have agreed to remain exposed regarding accidents occurring after the bankruptcy, regardless of when the vehicle was manufactured.  For those who had pending lawsuits, however, there is little money being made available to them, and – if they receive anything in negotiations with the companies – it is often a fraction of the actual value of their damages.

If you have been injured in a motor vehicle accident and have any questions, we would be happy to help.  Please call us at 716-542-5444.

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