bankruptcy

GM using bankruptcy as an excuse to skip out on auto warranties

Tuesday, August 30, 2011 by: J. D. Heyes
Tags: General Motors, bankruptcy, health news

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(NaturalNews) I'm sure you have heard of a little car company called General Motors. But did you know it was actually two companies, not one?

It's true. There is the "Old GM," the one that existed before the former No. 1 global car company declared bankruptcy in June 2009. And there is the "New GM," the one that exists now, after receiving about $60 billion in bailout funds, compliments of American and Canadian taxpayers.

Even though the models of automobiles, their logos and their body styles are identical, they were technically built by two separate companies. And GM is using that technicality to get out of honoring warranties on cars built before the company was given the dishonorable nickname of "Government Motors."

Donna Trusky, of Blakely, Pa., filed suit against GM June 29, alleging that her Impala, which she bought before the 2009 bankruptcy, had faulty rear spindle rods and caused her rear tires to wear out after just 6,000 miles. It was a problem inherent on Impalas from the 2007-2008 model years, and the company knew it.

Trusky's suit seeks class-action status and maintains that since Government Motors agreed to fix Impalas that serve as police vehicles, they should fix hers as well. GM doesn't see it that way.

The carmaker - which used to employ 395,000 workers in the U.S. and once billed itself as American as
baseball, hot dogs and apple pie - has chosen instead to hide behind a court technicality.

Rather than do the right thing and fix the defect on Trusky's car and about 400,000 others, thus regaining some of its lost reputation, Government Motors maintains the current version of the company - the New GM - is not responsible for the faults, flaws and finances of the Old GM.

"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," Benjamin Jeffers, a lawyer for GM, said. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."

Trusky, who I'm guessing is like most of us and isn't made of money, just sued the wrong company, the automaker says. She should have sued Old GM, even though, of course, it no longer exists.

"There are no specific factual allegations that New GM -- as opposed to Old GM -- did anything at all in relation to her vehicle," Jeffers wrote in court briefs. "Plaintiff here is trying to saddle new GM with the alleged liability and conduct of old GM."

No, "plaintiff here" is merely trying to get the company who made her defective car to live up to the warranty it offered when she bought it. Instead, GM - once flush with tax money, some of which was probably Trusky's - is choosing a legal sleight-of-hand to get out of making good on its promise.

How's that behavior for a former American icon? Does this make you more or less likely to buy a GM vehicle in the future?

Then again, maybe this legal stunt shouldn't surprise us. After all, much of what the government involves itself with generally turns out bad and is rarely on the level.

Sources:

http://www.reuters.com/article/2011/08/19/gm-impala-lawsuit-idUSN1E77I0Z820110819

http://www.nytimes.com/2009/06/02/business/02auto.html

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