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GM agrees to take liability claims

AP , NEW YORK

The General Motors logo is seen outside its headquarters in downtown Detroit on Dec. 12. General Motors Corp has agreed to take responsibility for future product liability claims, according to documents filed in federal bankruptcy court in New York on Friday.

PHOTO: AP

General Motors Corp (GM) has agreed to take responsibility for future product liability claims, removing what could have been a sizable roadblock on the automaker’s path to a quick sale of its assets and emergence from Chapter 11 bankruptcy as a new company.

As part of its government-backed restructuring plan, GM wants to sell the bulk of its assets to a new company and leave behind unprofitable assets and other liabilities such as product-related lawsuits. A hearing on the proposed sale is scheduled for tomorrow.

But in a concession to consumer groups and state officials who had threatened to block the sale because of product liability concerns, the new company will now assume responsibility for future claims involving vehicles made by the old company, according to documents filed in federal bankruptcy court in New York on Friday.

Under the automaker’s previous plan, “New GM” would not have assumed any liability for future claims related to GM vehicles made before the sale and creation of the new company. That meant that consumers who wanted to file a lawsuit related to a defective GM vehicle would have had to seek compensation from “Old GM,” a collection of mostly unprofitable assets left over after the sale, where there likely would be nothing left to pay their claims.

Under the new plan, “New GM” will not assume liability for already pending claims against the automaker and those people will still be forced to seek compensation from “Old GM.”

“The fact that ‘New GM’ will protect consumers injured by defective ‘Old GM’ cars is a positive development for public safety,” the Ad Hoc Committee of Consumer Victims of Chrysler and GM said in a statement released on Saturday.

But the group said that more needs to be done, noting that GM’s concession doesn’t help people that have already been hurt by its vehicles.

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