GM to be Free & Clear of Future Asbestos Claims

GM Bankruptcy Plan to Address Future Product Liability Claims, Leaves Asbestos Claimants in the Dust

January 29, 2009 — Unlike fellow bankrupt automaker Chrysler, General Motors (GM) has agreed to take on future product liability claims. This includes new claims arising from vehicles built by the “old” GM–a significant difference in comparison to the Chrysler bankruptcy. In the Chrysler bankruptcy, assets from “old” Chrysler were sold “free and clear” of liens, including current and future product liability claims.

GM‘s decision to assume future product liability responsibility apparently stems from pressure from a dozen state attorney generals, which objected to the company’s original plan, an almost mirror image of Chrysler’s plan. Unfortunately, these provisions don’t address current or pending claims against pre-bankrupt GM. With the current government plan, consumers with existing claims will have to fight it out amongst other unsecured creditors over the remains of the old estate, now known as Old CarCo. For current claimants, including those injured by asbestos contained in GM products, this leaves little hope of having their claims addressed.

In a court filing, GM noted that it was making the amendment “to alleviate certain concerns that have been raised on behalf of consumers” even though it was not legally obligated to do so. A hearing for the GM sale is scheduled for the morning of Tuesday, June 30th.

Asbestos Claimants Unfairly Targeted in Another Taxpayer Backed Bankruptcy

For those exposed to asbestos from GM products, the decision to assume liability for “old” GM appeared, on the surface, to be a positive development. Due to the latency period between asbestos exposure and development of diseases like mesothelioma or other asbestos cancers, new disease development would be attributed to “old” GM products. It is being reported that the new GM bankruptcy proposal specifically carves out asbestos claims, leaving them with the leftovers of the “old” GM estate.

For current and future victims of asbestos disease, this is unfortunate; both in terms of unfairly penalizing asbestos victims as opposed to other tort victims, and has serious implications in terms of whether GM‘s asset sale, as structured, could or should be approved. Mesothelioma and other asbestos victims deserve to be protected in the same manner as any other person injured by GM products, and the “new” GM should accept responsibility for the harm caused by all GM products.

Brayton Purcell will continue to oppose any plan or sale that does not adequately make provision for all persons injured by GM products, including victims of mesothelioma, lung cancer and other asbestos-related diseases, and their families.