Judge Rules GM Can Keep Its Bankruptcy Shield

By Jeff Bennett 

A federal judge ruled Wednesday General Motors Co. can keep its bankruptcy shield, which allows it to block potentially billions of dollars in legal claims by hundreds of customers seeking damages over a defective ignition switch.

U.S. Bankruptcy Judge Robert Gerber, who heard arguments, handed down a 134-page ruling saying he could find no instances where GM had committed fraud upon the court when it was going through the bankruptcy process. The shield prevents customers from suing for compensation for declining resale values and injuries tied to older GM compact cars that were equipped with the defective ignition switch.

Plaintiffs attorneys had argued GM mislead the court by not disclosing the faulty ignition-switch issue, which it knew about in 2005. GM has said its executive team was never informed of the problem until late 2013, which lead to a recall of 2.6 million vehicles in 2014. The ignition switch issue has now been linked to 84 deaths and 157 serious injuries.

"This ruling padlocks the courthouse doors," said Texas attorney Bob Hilliard, one of the lawyers representing the plaintiffs. "Hundreds of victims and their families will go to bed tonight forever deprived of justice. GM, bathing in billions, may now turn its back on the dead and injured, worry free."

A GM spokesman declined to immediately comment.

Write to Jeff Bennett at [e-mail]

Access Investor Kit for General Motors Co.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US37045V1008

Subscribe to WSJ: http://online.wsj.com?mod=djnwires