GM sued for $6-10B over faulty ignition switches


GM (GM) has been sued for $6-10B over the faulty ignition switches that led the car-maker to recall 1.6M cars.

Plaintiff lawyer Bob Hilliard said the lawsuit is about the fall in value of the vehicles rather than any deaths caused by the defect. GM has linked 12 deaths to the issue, although the Center for Auto Safety believes the number is much higher.

Hilliard also believes that GM shouldn't be protected from any problems stemming from before its bankruptcy, with the argument being that the company knew about the defect as it was going through Chapter 11 but didn't reveal it. "If you are aware of potential exposure to litigation and you don't reveal it, that's fraud," he said.

GM has started what it said will be an internal investigation into its decade-long failure to disclose the issue. However, the probe has already attracted criticism for using King & Spalding, the law firm that has defended the company in lawsuits over the fault, potentially causing major conflicts of interest.

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Comments (20)
  • monkey see
    , contributor
    Comments (617) | Send Message
     
    I know that there are GM shareholders that are going to rush to defend GM and rail at plaintiff's lawyers but the link to the NY Times article talks about Brooke Melton a young woman who was killed when her Chevy Cobalt lost power and collided with another car.

     

    A lawsuit was filed and for 3 years GM fought tooth and nail in giving her lawyers any information including how many lawsuits were failed. As a non- practicing lawyer I can tell you this is an absolute disgrace.

     

    Last summer, the case was suddenly settled.This tells me that there was a cover up and that until last summer thought they could keep all hell from breaking loose.

     

    People unnecessarily died and suffered severe injuries because of GM's inaction. You know about old GM and new GM. Bankruptcy ordinarily protects companies from damages or debts suffered before a bankruptcy was filed but not if there was fraud.

     

    If plaintiff lawyers are ableto prove fraud on GM's part newGM will beheld liable for accidents , deaths, injuries prior to thebankruptcyfiling.

     

    If you're a GMshareholder you better hold on to your seatbelt and hope that at least some of the damage is inflicted on GM executives including jail sentences.

     

    There is absolutely no excuse for GM's behavior. Even worse there is nothing that can bring back the people that died Or erase the injuries of the people who survived because of GM's Callous indifference to human life. No money in the world can make up for that but that's allwe have to victims and/ or their families.
    16 Mar 2014, 04:03 AM Reply Like
  • 11146471
    , contributor
    Comments (1379) | Send Message
     
    Big blow for GM!
    16 Mar 2014, 05:08 AM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (164) | Send Message
     
    While the deaths are a tragedy and those responsible should be held accountable, if one thinks long-term and removes emotion, this could be a good buying opportunity.

     

    Most lawsuits are settled and paid over many years. Even if GM is liable for several billion dollars, they have more than enough liquidity to pay with a strong balance sheet with well over $30 billion in cash and investments. They also bring in solid free cash flow. Operations in the USA are performing well, market share in Asia is terrific, the loses in Europe have narrowed considerably, and the financing operation is adding value. The company is also in much better shape with their pension liabilities.

     

    Given the low multiple of potential earnings, much of this is already priced in to the stock.
    16 Mar 2014, 08:04 AM Reply Like
  • chopchop0
    , contributor
    Comments (5268) | Send Message
     
    The low multiple was there to account for the inherent poor quality of gm vehicles. Now it's not just quality issues, it's safety ones too.

     

    Gm has always been consistent in producing crap cars that lose value quicker than anything else you can drive off the lot
    16 Mar 2014, 08:33 AM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (164) | Send Message
     
    Poor quality? Please provide evidence. Sales are solid in the US and the company is #1 in China. Apparently, millions of people like GM's "poor quality" cars.

     

    Given some time, this shall pass.
    16 Mar 2014, 10:28 AM Reply Like
  • chopchop0
    , contributor
    Comments (5268) | Send Message
     
    Poor quality? How about it took GM until LAST YEAR to get into the upper rank of the JD Power surveys?

     

    http://cnnmon.ie/1hoOXXZ

     

    CR: GM is "average"

     

    http://bit.ly/1hoOZPy
    16 Mar 2014, 10:45 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1478) | Send Message
     
    Matt - Next time you're out driving, notice how many GM and Chevy trucks have one of their front running lights which aren't functioning. If you notice a truck with a running light out, it's sure to be a GM or Chevy, and almost half the GM / Chevy trucks have this deficiency. While it's not a big thing in the whole scheme of things, it just screams "Junk".
    16 Mar 2014, 11:49 AM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (164) | Send Message
     
    Irrelevant. They sell 12-13% of consumer autos worldwide. That's not changing anytime soon. Just like the issues with Toyota a few years ago, HP 1-2 years ago, BAC 3 years ago, this shall pass.
    16 Mar 2014, 04:06 PM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (164) | Send Message
     
    That's one opinion. How about the millions of cars sold worldwide? Does the opinion of those folks count?
    16 Mar 2014, 04:09 PM Reply Like
  • The Rebel
    , contributor
    Comments (2826) | Send Message
     
    Matt-

     

    I stopped buying GM cars when they refused to recall for serious engine problems on 2.8 and 3.4 liter engines. After two engines failures on the same vehicle, that was enough for me. See ya. Most happy with the two Nissan Maxima's I have now.

     

    This is GM's problem going forward. How many will never buy a GM car again after this latest fiasco?
    16 Mar 2014, 08:41 PM Reply Like
  • jjm70
    , contributor
    Comments (51) | Send Message
     
    What have you been smoking? Lights go out on all cars & trucks at same ratio. It's like saying GM cars are more likely to have low tire pressure or a flat tire.
    16 Mar 2014, 09:07 PM Reply Like
  • glenart
    , contributor
    Comments (60) | Send Message
     
    Sounds like just another high profile fast buck lawyer trying to MAKE A FAST BUCK FOR HIMSELF and his crew of litigation vultures.........This is what makes the American legal system such a farce. The moment I read about $6-$10B being asked for this and fraud being kicked around, the smell became too much to stand.....Yes! Let GM pay out some money for the harm it actually caused to the dozen or two dozen people it killed.......But $6B-$10B? Not a chance!
    16 Mar 2014, 08:16 AM Reply Like
  • Copious28
    , contributor
    Comments (444) | Send Message
     
    I agree. The idea that a car depreciated in value dramatically, when the part can easily and cheaply be changed is laughable.
    16 Mar 2014, 04:22 PM Reply Like
  • MrVincent
    , contributor
    Comments (257) | Send Message
     
    This is why you should let companies go bankrupt.
    16 Mar 2014, 09:43 AM Reply Like
  • Matt Blecker, CFA
    , contributor
    Comments (164) | Send Message
     
    Despite some bailout funds, GM did go through the bankruptcy process.
    16 Mar 2014, 10:25 AM Reply Like
  • Quatum73
    , contributor
    Comments (56) | Send Message
     
    Seems like the following week is going to be hard for GM. I think that this lawyer is just trying to make a big case for himself.
    Regarding GM's long term potential the company is a bargain rightnow. That's just mine opinion.
    16 Mar 2014, 12:15 PM Reply Like
  • eagle1003
    , contributor
    Comments (1923) | Send Message
     
    American style litigation has gone a long way in preventing foreign enterprises from setting up shop in the US. That's too bad because the resulting competition would benefit consumers and provide jobs in America as a bonus. Unfortunately, the American legal system is also doing an excellent job of crippling home grown American business with the outrageous court ordered penalties for the inevitable failures to be perfect.

     

    American entrepreneurs haven't got a chance against the blood sucking lawyers who will not hesitate to bankrupt their young business with lawsuits that can cost millions. American law firms are among the richest in the world thanks to a legal system that is designed to enrich them.

     

    This farce is not going to end until the American people wise up and stop electing lawyers as their leaders.
    16 Mar 2014, 01:02 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1402) | Send Message
     
    I wonder if you'd feel the same way if you were getting run over by corporate lawyers on some case that injured you? I bet you wouldn't. Just saying. Big talk doesn't mean anything when you don't have any chips in the game.
    16 Mar 2014, 03:05 PM Reply Like
  • Milhouse
    , contributor
    Comments (655) | Send Message
     
    If there were no litigation against GM for these types of "errors", do you think that their cars would be safer?

     

    Everybody hates lawyers until they need one...
    17 Mar 2014, 09:03 AM Reply Like
  • Capt Jack Daniels
    , contributor
    Comments (1466) | Send Message
     
    I'm surprised no one at Gm thought about spinning the potential troubling ignition liabilities to the old motors company liquidation, when gm was being split into a good vs bad company.

     

    It's messed up that something like weight of your keys could render your air bag inn-operable.

     

    But those execs still took their bonuses.
    17 Mar 2014, 10:33 AM Reply Like
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