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.

Here is an interview with two plaintiffs’ lawyers who are actively involved in seeking monies for tort claimants who have claims against Chrysler and General Motors.

I have also included an article from www.HispanicBusiness.com that says "Fiat will be protected from any product liability lawsuits arising from claims of flaws in Chrysler vehicles sold before the sale’s closing later this month. Anyone filing such lawsuits will be able to recover only from the limited assets of the old company."

Finally, here is the point of view of a claimant as published in the Daily News.

I have read Judge Gonzalez’s Order of June 1 concerning the sale of substantially all of the assets of Chrysler to Fiat, and it certainly appears to me that the sale will cut off  future products liability claims. 

Here is the key language Pages 42 – 44 of  the Court’s Order.

Category (3) consists of tort and consumer objections. Those objections relating to  lemon law and warranty claims have been resolved by the modification of relevant language in the Fale order. An objection (ECF Docket No. 1231) was raised regarding an environmental claim, but the property to which the claim related is no longer owned by the Debtors and the objection is therefore overruled. Various objections were raised related to property damage claims and personal injury and wrongful death claims, including those which have not yet occurred. Some of these objectors argue that their claims are not “interests in property” such that the purchased assets can be sold free and clear of them. However, the leading case on this issue, In re Trans World Airlines, Inc., 322 F.3d 283 (3d Cir. 2003) (“TWA”), makes clear that such tort claims are interests in property such that they are extinguished by a free and clear sale under section 363(f)(5) and are therefore extinguished by the Sale Transaction. See id. at 289, 293. The Court follows TWA and overrules the objections premised on this argument. Even so, in personam claims, including any potential state successor or transferee liability claims against
New Chrysler, as well as in rem interests, are encompassed by section 363(f) and are therefore extinguished by the Sale Transaction. See, e.g., In re White Motor Credit Corp., 75 B.R. 944, 949 (Bankr. N.D. Ohio 1987); In re All Am. Of Ashburn, Inc., 56 B.R. 186, 190 (Bankr. N.D. Ga. 1986).