GM Asks Appellate Court to Reconsider its Ignition Switch Ruling

General Motors Co. has petitioned the Second U.S. Court of Appeals in Manhattan to review its ruling five weeks ago that opened the company to hundreds of liability claims about its faulty ignition switches.

Last month’s unanimous decision overturned a federal bankruptcy court ruling in 2009 that shielded “new” GM from the liabilities of the previous company. The earlier ruling meant that new GM could be held accountable only for its behavior after it emerged from bankruptcy restructuring.

GM admits it knew about the faulty switches for at least 10 years before it recalled 2.6 million of them in early 2014. The appellate court ruled the company’s failure to disclose the problem during its bankruptcy proceedings violate the due process rights of consumers. GM later acknowledged the switches were to blame for 124 fatalities and 275 major injuries.

Had the flaw been revealed at the time, the terms of GM’s restructuring would have been different, the court said. It added, “Due process applies even in a company’s moment of crisis."

New GM did end up paying more than $2.6 billion in compensation to victims, shareholders and the U.S. Dept. of Justice. But until now the company was sheltered from liability for claims about damages incurred before it emerged from bankruptcy in July 2009.

GM contends that the appellate decision was “invented out of whole cloth,” ignores decades of precedent and “eviscerates the finality” of bankruptcy asset sales.