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GM to seek US court protection from ignition lawsuits

US Senator Edward Markey holds up a faulty General Motors ignition switch during a press conference with the family members of deceased drivers on Capitol Hill in Washington, April 1, 2014
US Senator Edward Markey holds up a faulty General Motors ignition switch during a press conference with the family members of deceased drivers on Capitol Hill in Washington, April 1, 2014

General Motors plans to ask a bankruptcy court to rule that it is protected from lawsuits potentially worth billions of dollars arising from faulty ignitions tied to 13 deaths and numerous crashes.

In a federal court filing, GM said it plans to ask the New York court which oversaw its 2009 bankruptcy to determine whether it can be sued for liabilities arising from the company's operations pre-bankruptcy.

The bankruptcy reorganization, which came after the US government rescued the largest US automaker the previous year, split the company into "Old GM" and "New GM."

The company's filing late Tuesday in Corpus Christi, Texas, said that the bankruptcy court's original restructuring plan made clear that liabilities such as the ignition-switch problem remain with Old GM and that third parties cannot sue New GM for them.

Ignition-switch lawsuits like one filed in the Texas court relate "to a vehicle designed, manufactured, originally sold, and advertised by Old GM; a potentially defective component part allegedly existing in an automobile sold in 2006, before New GM even existed," the company argued.

GM will ask the bankruptcy court for a definitive ruling on the liability of New GM in all ignition cases.

The 2009 bankruptcy decision "has already expressly enjoined third parties... from asserting claims against New GM that remained with Old GM," the company said.

GM wants the Corpus Christi trial halted at any rate so it can consolidate into one all of the lawsuits arising from the faulty ignitions.

It said it expects the bankruptcy court judge to rule it is protected from the suits.

But even if the court rules that New GM is partly liable, its decision will "inevitably narrow and fundamentally alter" the nature of the cases, GM said, more reason to halt the Texas proceedings.

The case would address GM's liability for the faulty ignitions installed in millions of cars after 2004 that can abruptly switch into "accessory" or "off" position while in drive, especially when the car is jolted.

That can turn off its electrical systems, including safety airbags, preventing them from inflating in a collision.

GM has said it knows of 31 accidents that can be tied to the ignition problem. The independent Center for Auto Safety says it has tracked 303 accidents in which GM cars were involved and in which the airbags did not inflate, but the link to the ignitions is not clear.

GM has recalled 2.4 million cars since February for the problem.

General Motors headquarters in the Renaissance Center are seen on January 14, 2014 in Detroit, Michigan
General Motors headquarters are pictured on January 14, 2014 in Detroit

But the company is now under investigation from the Justice Department and Congress for not acting much earlier, as documents showed concerns over the ignition design were expressed inside the company as early as 2001.

Despite the company's belief that it is protected in the 2009 bankruptcy ruling, earlier this month GM hired victim compensation expert Kenneth Feinberg to study how it should address victims of accidents tied to the faulty ignitions.

Feinberg has handled victim compensation agreements for the September 11 attacks, BP oil spill and Boston marathon cases, among others.

Amid estimates that the company faces potentially billions of dollars' worth of claims, GM chief executive Mary Barra has said that Feinberg would "explore and evaluate options" for its response.

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