Day on Torts
Here is an article from The Hill that gives more information on how existing products liability claims against GM and Chrysler will be handled. Bottom line: claimants will be unsecured creditors, and will be thrown into the pot with all of the other unsecured creditors.
Of course, to the extent that the claims are covered by insurance, and the insurance company is still viable, the money should be paid. The problem, of course, is that the self-insured retention for these companies is quite high (I don’t know how much) and thus those able to prove their claims will be in the unsecured creditor pool for the retention amount and can only look to the insurance company for excess amounts.
For my other posts on this subject look here, here, and here.
As discussed in a previous post, the other avenue for monies for those with existing claims not reduced to judgment are claims against dealers, component part manufacturers, etc. Who can be held liable is very much subject to the facts and applicable state law.
How much are the unsecured claims? How much money will be left to divide among unsecured claimants? It will take some time to determine the answers to those questions. I have seen the Chrysler tort claims valued at several different numbers hundreds of millions of dollars apart. It is easy to value a claim if it is reduced to judgment. If the claim is a pending claim then the value can only be estimated until it is reduced to judgment or until an agreement is reached on how to put a dollar value on the claim.
But that are many unsecured claims. Here is a list offered by one law firm of the top 50 unsecured creditors in the Chrysler action. Leading the way is Ohio Module Mfg.Co, LLC with a stated claim of over $70,000,000. Number 50 on the list is purportedly owed $5,000,000. I did not take the time to add them up but the numbers appear to total over $700,000,000. One article suggests that the total trade debt is $1.5 Billion.