General Motors Co (GM) has won a legal victory related to a bankruptcy shield that could stave off costly claims tied to defective ignition switches.
A federal judge of the U.S. Bankruptcy Court on Wednesday ruled that the automaker can retain a bankruptcy shield that protects it from claims over deaths and other damages from crashes prior to GM's 2009 restructuring in Bankruptcy Court. This means GM can avoid hefty payments toward claims over faulty ignition switches.
But the judge, Robert Gerber, ruled that people injured in a vehicle built before the bankruptcy but in a crash after the new GM was formed can make claims against the company, while those killed or hurt before the restructuring cannot claim damages from the current company.
The judge said GM was not found to have committed fraud upon the court when it was going through its 2009 bankruptcy; GM has said its key executives were not aware of the depth of the problem until late 2013.
GM recalled 2.6 million Chevrolet Cobalts and other vehicles in early 2014 for a faulty ignition switch that has been tied to 84 deaths and 157 serious injuries. The actions have already cost GM billions of dollars.
GM closed Wednesday at $36.94, up $0.46 or 1.26%, on a volume of 12.7 million shares. In after hours, the stock gained $0.31 or 0.84%.
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