GM and Chrysler Bailouts Freed Them from Paying Accident Victims
Monday, May 30, 2011
When General Motors and Chrysler were bailed out by the Obama administration, they received not only billion-dollar deals, but also a get-out-jail-free-card for auto liability lawsuits.
Today, the newly reborn car makers don’t have to pay the plaintiffs who won lawsuits before the government-arranged bankruptcies. These legal cases stemmed from defects in GM and Chrysler cars that resulted in accidents that left passengers dead or permanently disabled.
For example, Vicki Denton was killed several years ago after the airbag in her 1998 Dodge Caravan minivan failed to deploy during a head-on collision. Her family won their civil case against Chrysler, but the manufacturer is free to avoid paying the $2.2 million judgment.
In 2009, Chrysler received a $12.5 billion bailout from Washington, and GM’s was even bigger: $50 billion. Like its competitor, GM was allowed to skip paying the victims of its faulty cars. By the time GM went into bankruptcy, more than 2,500 litigation claims totaling $3.3 billion had been filed against the company.
“This was not a normal case. The government was deciding who was going to be taken care of and who was not,” David Skeel, a University of Pennsylvania law school professor and bankruptcy expert, told The Wall Street Journal. Skeel added that there was a “deep unfairness” about the bailout for car accident victims. “It would have been easy enough to set something aside for them.”
Car Bailouts Left Behind Crash Victims (by Mike Spector, Wall Street Journal)
Automakers’ Bailout and Bankruptcies Shortchanged Accident Victims (by Marian Wang, ProPublica)
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