GM Agrees to Product Liability

Bankrupt American manufacturer GM has agreed to assume liability for future product defects in an attempt to speed up their exit from Chapter 11 protection. In addition, GM will also change the terms of the proposed asset sale to meet the objections raised by 20 suppliers, thus avoiding a Chrysler-like delay, Reuters reported.

"The purchaser will expressly assume all product liability claims arising from accidents or other incidents arising from the operation of GM vehicles subject to the closing," GM said in its court filing.

The decision came after a group of nine state attorneys general objected GM's reorganization on the grounds that it would deprave customers of protection against product defects under state laws.

Alongside state attorneys, a group of 300 consumers which are in litigation with the manufacturer also objected the bankruptcy process, on the grounds that those injury and wrongful-death claims would have to be paid out from the sale of GM's mostly worthless assets.

The group, which calls itself the Ad Hoc Committee of Consumer Victims of General Motors, said in court the automaker's insurance would only cover product liability claims of up to $35 million per claim. Not enough to cover "devastating injuries" from alleged vehicle defects, the group said.

As a result, GM said it will continue to pay "lemon laws" in order for consumers to be entitled to refunds or replacements of defective vehicles.

On another front, after last week Toyota raised objections over the NUMMI joint venture, GM is now saying they will try and work out a "consensual" agreement with Toyota to address the issue.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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