SoylentNews is people
SoylentNews
from the that's-not-how-reincarnation-works dept.
When a company reorganizes itself through a bankruptcy, is it the same company? And if so, is it liable for alleged wrongdoing committed by the previous version of itself?
These are questions raised by General Motors' efforts to dodge hundreds of lawsuits related to a potentially fatal ignition-switch flaw in millions of its older sedans. After receiving a stinging defeat in a federal appellate court this past summer, the automaker is now making a Hail Mary pass to the U.S. Supreme Court to try to convince judges that it has reincarnated into a seven-year-old car company free of liabilities from its previous life.
With potentially billions of dollars' worth of personal and financial injury claims at stake, the Detroit automaker's lawyers argue that allowing these lawsuits to go through would undermine an important aspect of corporate bankruptcy: giving assurance to the buyers of troubled companies that they aren't also buying a whole bunch of unexpected legal headaches.
But in GM's case there was no outside buyer. It essentially bought itself (with taxpayer money) in the wake of the mortgage-lending crisis that tipped the nation into recession and steered the American auto industry into a ditch.
(Score: 0) by Anonymous Coward on Monday December 19 2016, @01:11PM
Sure, we'd all like it to be the case that the new GM is the same as the old GM. After all, it's the same name, the same products, the same people - heck, 90% the people working there in *any* position are people who worked in the old GM. So you'd think it's the same thing, no.
But that's not how companies work. They are created as a buffer against liability. That is why things like LLCs, Corporations and Inc.'s exist: to hide those who are behind it (which isn't always a bad thing).
Now that'll be the legal outcome, I bet...
But, that's just a tad bit too easy. At what point do you puncture the corporate veil and say: "you guys are really the same as the ones before: you sell the same shit, you got the same make up of the board, your management is pretty much the same, you just got a different EIN this time around"
(Score: 0) by Anonymous Coward on Monday December 19 2016, @09:52PM
I don't even know where to begin to explain what's wrong with your lack of logic.
So the company is a buffer, good then let's make the company post for it. Well, no because it's not the same company. But it's the same people! Let's make the people pay then, they're obviously abusing the system! Well no, because the company is a buyer that protects them from liability. etc.
See my point? Either the company is as buffer to liability and it pays the damages or the people pay or both, but you can't have none of them paying for their wrongdoing.