GM held preliminary talks with victims of defective ignition switches

General Motors held preliminary talks Friday to discuss legal claims from accidents linked to defective ignition switches that prompted the giant automaker to recall 2.6 million Chevrolet Cobalts and other small cars this year.

Robert C. Hilliard, a Corpus Christi, Tex., attorney, and three other lawyers met in Washington with Kenneth R. Feinberg, whom GM hired last month to explore setting up a compensation fund for people hurt and killed in accidents tied to the defective ignition switch.

“I met with Mr. Hilliard and three of his colleagues today here in Washington for a preliminary discussion, at his request, on the quantity and quality of his claims,” Feinberg said. “It is very premature to even use the word ‘settlement.’ All we did today was have a nice discussion of what he believes is the nature of his cases.”

Hilliard said he is representing 53 families with loved ones who were killed because of the defect, as well as 273 injury victims.

The number of people represented by Hilliard — one of a growing number of lawyers pursuing claims — is far greater than the 13 victims in 32 accidents that GM has linked to the faulty switch.

A history of GM’s ignition problems

GM has acknowledged that it knew about the faulty ignition switch for more than a decade before issuing the first of a series of recalls in February. The faulty switches caused cars to inadvertently turn off, stiffen steering and brakes, and disable air bags.

“My clients are grieving for loved ones killed in accidents GM could have prevented,” Hilliard said in a statement.

Feinberg, a lawyer and mediation specialist who has overseen settlement funds for victims of the BP oil spill, the Boston Marathon bombing and the Sept. 11, 2001 , terrorist attacks, has said that he hopes to have a proposal completed by the end of the month or early June.

The compensation fund is just one track GM is pursuing to clear the legal claims that have erupted in the wake of the recall debacle.

In cases that do not involve death or injuries, the company has taken a tougher tack and is invoking a liability shield it gained in its 2009 bankruptcy and federal bailout.

The reorganization plan allowed the automaker to deposit most of its liabilities into a corporate vessel known as the “old GM.” The company’s assets, meanwhile, make up the “new GM,” which has emerged from bankruptcy to once again become a thriving and profitable company.

GM lawyers have argued that the new GM did not assume liability for the type of claims being sought in nearly 60 proposed class-action suits, in which owners are seeking compensation for the diminished value of their recalled cars.

That shield is being challenged in federal bankruptcy court by lawyers who say that GM forfeited its right to liability protection by not disclosing the ignition-switch problem during court negotiations that led to its reorganization.

U.S. Bankruptcy Court Judge Robert Gerber reportedly urged the parties to settle the claims in a conference Friday in his Manhattan courtroom. Gerber said he would welcome the prospect of a resolution that avoided a “monstrous battle,” Reuters reported.

Michael A. Fletcher is a national economics correspondent, writing about unemployment, state and municipal debt, the evolving job market and the auto industry.
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