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Bankruptcy

: Credit Slips

GM and §363(f)

By Stephen Lubben

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As I noted in a recent post, "new GM" has agreed to "assume all products liability claims arising from accidents or other discrete incidents arising from the operation of GM vehicles occurring subsequent to the Closing of the 363 Transaction." (Debtors' response to objections, paragraph 62). The purchasing entity has also agreed to be responsible for "lemon law" claims.

This suggests that current tort claims will continue to be subject to Chrysler-like treatment, meaning that the gains in speed at the GM sale hearing may be somewhat less than I suggested in my prior post. On the other hand, from a strategic perspective, this move would be consistent with the settlement GM made with its bondholders on the eve of filing. That settlement had the effect of fracturing the dissenting bondholders and removing the most effective sale objectors, and I have previously argued that the extension of §363(f) to future claims is the weakest part of the automakers' successor liability argument, because doing so would seem to violate due process.

Full post as published by Credit Slips on June 28, 2009 (boomark / email).