GM and Chrysler Bailouts Freed Them from Paying Accident Victims

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When General Motors and Chrysler were bailed out by the Obama administration, they received not only billion-dollar deals, but also a get-out-jail-free-card for auto liability lawsuits.

Today, the newly reborn car makers don’t have to pay the plaintiffs who won lawsuits before the government-arranged bankruptcies. These legal cases stemmed from defects in GM and Chrysler cars that resulted in accidents that left passengers dead or permanently disabled.

For example, Vicki Denton was killed several years ago after the airbag in her 1998 Dodge Caravan minivan failed to deploy during a head-on collision. Her family won their civil case against Chrysler, but the manufacturer is free to avoid paying the $2.2 million judgment.

In 2009, Chrysler received a $12.5 billion bailout from Washington, and GM’s was even bigger: $50 billion. Like its competitor, GM was allowed to skip paying the victims of its faulty cars. By the time GM went into bankruptcy, more than 2,500 litigation claims totaling $3.3 billion had been filed against the company.