Why General Motors is asking the Supreme Court to say it's only 7 years old not 108

[rug]

The Detroit automaker tosses a Hail Mary pass to SCOTUS hoping to dodge lawsuits in its ignition switch scandal

THURSDAY, DEC 15, 2016 9:58 AM UTC
ANGELO YOUNG

When a company reorganizes itself through a bankruptcy, is it the same company? And if so, is it liable for alleged wrongdoing committed by the previous version of itself?

These are questions raised by General Motors’ efforts to dodge hundreds of lawsuits related to a potentially fatal ignition-switch flaw in millions of its older sedans. After receiving a stinging defeat in a federal appellate court this past summer, the automaker is now making a Hail Mary pass to the U.S. Supreme Court to try to convince judges that it has reincarnated into a seven-year-old car company free of liabilities from its previous life.

With potentially billions of dollars’ worth of personal and financial injury claims at stake, the Detroit automaker’s lawyers argue that allowing these lawsuits to go through would undermine an important aspect of corporate bankruptcy: giving assurance to the buyers of troubled companies that they aren’t also buying a whole bunch of unexpected legal headaches.

But in GM’s case there was no outside buyer. It essentially bought itself (with taxpayer money) in the wake of the mortgage-lending crisis that tipped the nation into recession and steered the American auto industry into a ditch.

http://www.salon.com/2016/12/15/why-general-motors-is-asking-the-supreme-court-to-say-its-only-7-years-old-not-108/

[onecaliberal]

1. Wtf

[no_hypocrisy]

2. If memory serves, a corporation is legally declared "dead" when the Board of Trustees

votes to discontinue. (I don't remember whether the shareholders vote on this proposal.) The process is called "dissolution".

In any case, the corporation "winds down" where all debts are paid and the remaining assets distributed and the Board is disbanded and the shares are cashed in by the shareholders.

I don't believe I remember that happening with GM. To the contrary, all factories were making cars and trucks throughout the bankruptcy and thereafter.

https://www.nolo.com/legal-encyclopedia/free-books/small-business-book/chapter12-11.html

[FarCenter]

3. My recollection is that they created an "old GM" and a "new GM"

All the existing liabilities and bad debt, etc. went into the "old GM" corporation which ceased to be.

The viable assets, such as factories, designs, dealer agreements, etc., were bought from the trustees by the "new GM".

So technically, I would think that the "new GM" only came into being 7 years ago, and the "old GM" was wound up by the trustees.

https://en.wikipedia.org/wiki/General_Motors_Chapter_11_reorganization

[Initech]

4. If corporations are people, can we put to death some of the more toxic ones already?

Hey I finally see an upside to Citizens United!

[KamaAina]

5. "I'll believe corporations are people when Texas executes one."

[surrealAmerican]

6. When a person declares bankruptcy are they still criminally liable ...

... for their actions before that time? I don't see how GM could have a leg to stand on with this argument.