GM Loses Bankruptcy Shield - Could Mean Billions In Liability Payments

[Gorehamj]

John Goreham
Contributing Writer, GM-Trucks.com
7-14-2016

Late yesterday came word that a new court decision has overturned GM's bankruptcy shield. In a nutshell, this was GM's get of out jail free card for the biggest fines and penalties the company could suffer as a result of the ignition switch debacle. GM had previously succeeded in convincing lower courts that its move through bankruptcy in 2008-2009 meant that the "New GM" would not be responsible for deaths and problems that occurred prior to its restructuring. A higher court has now ruled against that, basically saying (in our words) "You dudes lied to the court when you failed to disclose that you knew about this issue prior to the restructuring, so buckle up and get out your wallets."

 

GM's restructuring was unusual in one other key way besides its absolution from liability. Of course GM was allowed to escape its debtors, like most companies that go through the process that GM did. However, until 2008 it was unheard of for a company to be re-formed and for the new entity be able to carry old losses forward to offset future earnings, and thus, escape paying federal tax on its future profits. That special provision (part of TARP) has, and will, cost the U.S. taxpayers tens of billions of dollars in tax revenue.

 

For more on the recent ruling see this source.

For more on the tax-related issue, see this source.

[barry G]

a business that big.. gaining gov't and international news.

 

I think this sums it up in their own article.

 

"The only person who could effectively make an argument in 2009 is somebody who bought a time machine," Weintraub said.

 

they bought a time machine.

 

The real cases stand out anyway, they do not need babbling in a court room.

[Jsdirt]

GOOD! If they and the government wanted them to come back from the dead so bad, then they SHOULD be responsible for EVERYTHING that happened prior to restructuring.

 

I recall arguing with people about GM's cost to the taxpayers. I got, "They paid that all off - you don't know what you're talking about!" To those people, I say, READ THAT LAST PARAGRAPH. I was right that they will continue to cost us money:

......

 

GM's restructuring was unusual in one other key way besides its absolution from liability in cases it knew existed prior to its collapse. GM was allowed to escape its debtors, like most companies that go through the process that GM do, however, until 2008 it was unheard of for a company to be re-formed and for the new entity be able to carry old losses forward to offset future earnings, and thus, escape paying federal tax on its future profits. That special provision (part of TARP) has, and will, cost the U.S. taxpayers tens of billions of dollars in tax revenue.

 

.....

.....

[Nargg]

I still don't believe GM should be to blame for the ignition switches, as all the wrecks involved the drivers had too much weight on the key chain. Something I was warned about 35 years ago when I was taught to drive, don't put too much on your car's keychain. Plus, there are other wrecks known from people doing this in cars other than GMs too. Lawyers wanted scape goats, and TV news wanted a big story.

[Jsdirt]

My wife has been driving our '86 Grand Marquis with mace, and 1,000 other things hanging off this 3 lb. chain for the past 13 years. 232k on the 30 year old car now, and the ignition (and lots of other parts) are still OEM and working fine.

 

GM chose to cheap out on the switch, so they should burn for it.

[CCPcoatings]

GOOD! If they and the government wanted them to come back from the dead so bad, then they SHOULD be responsible for EVERYTHING that happened prior to restructuring.

 

I recall arguing with people about GM's cost to the taxpayers. I got, "They paid that all off - you don't know what you're talking about!" To those people, I say, READ THAT LAST PARAGRAPH. I was right that they will continue to cost us money:

 

 

It doesn't appear that you know what you're talking about. Other than the obvious less revenue for the Treasury, how does GM carrying forward their business losses cost YOU money? Big and small businesses do this everyday and it doesn't affect you in the least. They're not getting handouts from the government. The only money they're getting back, is money they've already paid in taxes, just like you likely do every year.

 

The only thing "unique" about this situation is that when GM became "New GM" they were able to recoup losses acquired as "Old GM". Still not groundbreaking since most large companies are able to offset most of their tax liability anyway.....

[EX-F150 owner]

I still don't believe GM should be to blame for the ignition switches, as all the wrecks involved the drivers had too much weight on the key chain. Something I was warned about 35 years ago when I was taught to drive, don't put too much on your car's keychain. Plus, there are other wrecks known from people doing this in cars other than GMs too. Lawyers wanted scape goats, and TV news wanted a big story.

Believe what you want but don't forget that McDonald's was sued for serving a cup of hot coffee. Was there any warning from GM about what can hang from the key switch?

I agree with Jsdirt. GM did cheap out on this and then tried to cover it up. They should be held liable.

[Jsdirt]

 

 

It doesn't appear that you know what you're talking about. Other than the obvious less revenue for the Treasury, how does GM carrying forward their business losses cost YOU money? Big and small businesses do this everyday and it doesn't affect you in the least. They're not getting handouts from the government. The only money they're getting back, is money they've already paid in taxes, just like you likely do every year.

 

The only thing "unique" about this situation is that when GM became "New GM" they were able to recoup losses acquired as "Old GM". Still not groundbreaking since most large companies are able to offset most of their tax liability anyway.....

How did I know these people were lurking in the shadows. * Sigh * Guess I have to post the same thing ... AGAIN, so they can understand.

 

 

Maybe I can make the text bigger this time around ...

.....

 

GM's restructuring was unusual in one other key way besides its absolution from liability. Of course GM was allowed to escape its debtors, like most companies that go through the process that GM did. However, until 2008 it was unheard of for a company to be re-formed and for the new entity be able to carry old losses forward to offset future earnings, and thus, escape paying federal tax on its future profits. That special provision (part of TARP) has, and will, cost the U.S. taxpayers tens of billions of dollars in tax revenue.

...

...

[diyer2]

Opinions are like ***holes, everybody's got one. Here's my flatulation.

They made an inferior product to save money IMO. Goes right along with the Pinto gas tank design.

I think the correct term is profit and loss calculations.

 

We, the tax payer bailed out Wall Street, banks, etc. They all got their pay checks and bonuses.

 

Stinks more than a bunk house full of cowboys on a bean diet.

 

I don't mind being F***ed as long as it female and kissing is involved.

[CCPcoatings]

I still don't believe GM should be to blame for the ignition switches, as all the wrecks involved the drivers had too much weight on the key chain. Something I was warned about 35 years ago when I was taught to drive, don't put too much on your car's keychain. Plus, there are other wrecks known from people doing this in cars other than GMs too. Lawyers wanted scape goats, and TV news wanted a big story.

 

 

There are multiple reasons. Namely, not all the victims had significant weight on their keys to cause this situation. NOR, would such a situation be plausible for most people to comprehend. Picture your young daughter or sister driving down the freeway and all of a sudden there steering wheel is locked and they think they have no brakes.......

 

The BIGGEST problem here is that GM and the suppliers recognized that there was a REAL problem at a certain point that was literally killing people and they tried to hide it. They made engineering changes to correct the problem WITHOUT changing part numbers for the sole purpose of hiding the problem. The actual crime has less to do with a faulty part and more to do with the shady way in which it was handled, or NOT handled in this case.

 

It's no different then getting your ass beat by your parents for "LYING to them" about what you did as opposed to what you ACTUALLY did..

[Nargg]

Believe what you want but don't forget that McDonald's was sued for serving a cup of hot coffee. Was there any warning from GM about what can hang from the key switch?

I agree with Jsdirt. GM did cheap out on this and then tried to cover it up. They should be held liable.

 

So people should always blame others for our own stupidity? Wow.

[Nargg]

 

 

There are multiple reasons. Namely, not all the victims had significant weight on their keys to cause this situation. NOR, would such a situation be plausible for most people to comprehend. Picture your young daughter or sister driving down the freeway and all of a sudden there steering wheel is locked and they think they have no brakes.......

 

The BIGGEST problem here is that GM and the suppliers recognized that there was a REAL problem at a certain point that was literally killing people and they tried to hide it. They made engineering changes to correct the problem WITHOUT changing part numbers for the sole purpose of hiding the problem. The actual crime has less to do with a faulty part and more to do with the shady way in which it was handled, or NOT handled in this case.

 

It's no different then getting your ass beat by your parents for "LYING to them" about what you did as opposed to what you ACTUALLY did..

 

The "they hid it" was speculation, based on hate and anger. Why would GM act when they also believe the problems to be owner caused? People do stupid things, and some pay dearly for them. Blaming others for our own stupidity is worse.

[scottl1346]

funny how they blamed the size of the hole on a key. my 05 Pontiac was involved in that recall. the car would randomly shut off all the time finally did some reading and i found the contacts in the ignition would get corroded causing a power issues with the fuel pump so i took it apart cleaned and di-electric greased it and never a problem again and i also never did the recall.

[CCPcoatings]

How did I know these people were lurking in the shadows. * Sigh * Guess I have to post the same thing ... AGAIN, so they can understand.

 

 

Maybe I can make the text bigger this time around ...

 

 

Feel free to Make it as big as you'd like genius. All you're doing is highlighting your limited UNDERSTANDING of corporate accounting practices.

 

Whether GM carries over past debt from a bankruptcy, ignition systems lawsuits of failed bake sales has ZERO affect on your day to day existence. You're life isn't affected in the least if the IRS makes 500 billion or 490 billion nest year...........

[Jsdirt]

delete double post