Jeremy Warriner lost both his legs after a collision and subsequent fire that engulfed his Chrysler Jeep Wrangler in 2005 due to an allegedly defective brake-fluid container. Terry Cole, a Missouri businessman has been confined to a wheelchair for the past 35 years, from the third-degree burns on the lower half of his body allegedly caused, by a defective seat heater in his GM Cadillac Escalade. Even if they were to successfully prove their claims, they would be left high and dry. Thanks to Section 363(f) and Section 1141(c) of the code of the Bankruptcy under chapter 11. These two well publicized cases indicate how the American taxpayers’ dollars are being spent to save mismanaged companies like Chrysler and GM and how the very tax payer has no recourse from the wrath of the defective vehicles of the said manufacturers.
Chrysler LLC has officially been sold to Italian automaker Fiat SpA (FIATY.PK: 9.81 -0.09 -0.91%). Fiat will own 20% of Chrysler initially, and could expand that stake by an additional 15% if it meets certain operational milestones. A ruling relieves the new company of responsibility for old losses.
Chrysler was sold to Fiat under Section 363 and 1141(c) of the bankruptcy code that entitles them to the following liability shields:
- Wipes out all successor liability claims against the post-bankruptcy company, even future claims
- Shifts plaintiffs and other unsecured creditors to the last in the queue to be paid by a bankrupt company, if they are to be paid at all
- Authorizes the sale of property free of all “interests” in the property
- Speaks of sales of property free and clear of all claims and interests
- New Chrysler’s earlier willingness to take over the Debtors’ obligations to millions of their vehicle owners has now become void
- Leaves Consumers and Personal Injury Victims without recourse against New Chrysler
- Products liability claims are not “interests” in property.
- Treats claims of someone injured by a defective product in the same way as would, someone with a bond
- Expects the injured person to queue up with unsecured creditors behind the secured creditors
Chrysler LLC and General Motors are being rewarded with a free pass for years of incompetence and inefficient management practices while their victims are being left powerless. Chrysler’ has to answer about 160 claims worth an estimated $600 million while the GM, about 300 claims.
The sale of the Chrysler’s assets to New Chrysler or for that matter, of GM, SHOULD RETAIN the liability to Consumers and Personal Injury Victims that arise out of alleged defects in the vehicles sold by these Debtors, for the following reasons:
- Current or future claimants, both Consumers and Personal Injury Victims, as a result of defects in the Debtors’ vehicles cannot file claims in a fair and reasonable manner
- Consumers and Personal Injury Victims, may choose to sue production and sale personnel like the dealers and suppliers, New Chrysler cannot exist without
- Dealers or the third party responsible for the consumer and personal injury liability are not competent to address litigation, sooner or later leading to endanger the survival of New Chrysler
- The cost of personal injuries, and losses, will be borne by the Consumers, the government, or insurers in the form of uncompensated care if the dealers or suppliers are not available for them
- Owners of Chrysler vehicles now/future will be possessing vehicles without anyone standing behind them, with fast depreciating resale and trade-in values
- New Chrysler will have to face media onslaught that damages the brand name and makes its survival difficult, if not impossible
- Consumers will have second thoughts about owning a New Chrysler/GM’s vehicle
- Protection of the rights of people who are sitting on a possible time bomb in the form of Chrysler or GM vehicle becomes a myth
- Skepticism runs high about the outcome of the personal injury plaintiffs and even the law’s treatment of pending tort claims
- The Chrysler sale sets precedence that is obviously problematic in this context of harm to people with very serious injuries
- Sets precedence for companies in bankruptcy to follow suit
- Huge numbers of Debtors’ vehicles in the United States and the Debtors’ superior knowledge about any issues with these vehicles render it unwise to try to transfer the liability for defects in these consumer products to third parties
Plaintiffs and their families, organized by the non-profit Center for Justice and Democracy are seeking congressional action:
- To provide for these victims
- Obama administration to fashion a victim’s fund such as was done for the survivors of the 9-11 attacks
- Require both automakers purchase a retroactive insurance policy to cover past, present and future injury claims
- Set a future fund by the auto manufacturer in the likeness of asbestos claims