Robert T Abney & Associates bankruptcy law on GM ‘Economic Victims’ Fight Bankruptcy

A judge on Wednesday set a schedule for General Motors Co.'sGM -0.27% bankruptcy court fight with the so-called “economic victims” of GM’s ignition switch defect, urging both sides to work together toward a resolution.

Judge Robert Gerber of U.S. Bankruptcy Court in Manhattan must ultimately decide, among other issues, whether his approval of a 2009 sale of the so-called “old GM” absolves “new GM” from lawsuits brought by those who say their cars lost value because of the ignition switch defect.

The judge Wednesday said he wants written briefs filed on when they were denied due process by the 2009 sale approval, what their remedies should be and whether any of their claims are against “old GM.” The next status conference is set for Aug. 5.

“We’re going to do as much as we can to keep things moving forward as quickly as possible consistent with getting a result that’s just,” the judge told lawyers gathered in court Wednesday. He later said the disagreement concerns “very complicated issues.”

The judge particularly urged both sides to continue building a set of facts that they can agree upon so that their arguments will be over matters of law. That, he said, would help move along the proceeding without slowing down the actual lawsuits themselves.

“Deferring these matters to a wait of discovery would materially, dramatically, seriously, I keep adding adverbs…I think it’s all really bad,” Judge Gerber said.

The judge said he wants both sides also to agree to facts related to the allegations that the bankruptcy court itself was defrauded in the 2009 sale.

The new GM in early May asked Judge Gerber to halt class-action fraud lawsuits filed by GM owners following the auto maker’s recall of 2.6 million vehicles with a faulty ignition switch.

At a May bankruptcy-court hearing, a lawyer for plaintiffs who have been financially harmed by the faulty switches said that among other things, they were denied due process as part of the company’s government-orchestrated 2009 bankruptcy and sale.

The judge is being asked to consider whether General Motors is discriminating against the economic-loss plaintiffs by treating personal-injury claimants separately.

In 2009, General Motors’s healthy assets were sold to a government-backed entity, forming the new GM. As part of GM’s bankruptcy plan, burdensome liabilities were left with the old GM.

The auto maker says plaintiffs in some 60 class-action lawsuits can pursue claims only against the old GM’s liquidating trust, which had more than $1 billion as of March 31, according to filings.