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posted by Fnord666 on Monday December 19 2016, @12:57PM   Printer-friendly
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.


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  • (Score: 4, Insightful) by kurenai.tsubasa on Monday December 19 2016, @01:58PM

    by kurenai.tsubasa (5227) on Monday December 19 2016, @01:58PM (#443120) Journal

    Sure, why not? I'll go and declare bankruptcy now too, buy myself with some pocket change I had laying around, and own my house outright. In fact, given that most Americans are in some kind of debt, everybody should go and declare bankruptcy. It'd be like the ending of Fight Club (or Mr. Robot season 1 or what have you). Everything would go back to zero.

    Oh… this is only for immortal corporate people who can't be jailed. Gotcha.

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  • (Score: 2) by driven on Monday December 19 2016, @02:15PM

    by driven (6295) on Monday December 19 2016, @02:15PM (#443127)

    Let's take that analogy a step further. Hypothetically go and rob a store and declare bankruptcy before the cops catch you! It's so simple.
    Oh, I can't do that? But I thought corporations were people, too?

    • (Score: 0) by Anonymous Coward on Tuesday December 20 2016, @02:31AM

      by Anonymous Coward on Tuesday December 20 2016, @02:31AM (#443503)

      You need to start an LLC with at least a 10 person board. That LLC needs to hire 'contractors' that were officially just told 'we need to make money off store xxx.' Then those contractors need to break in, steal the money from the store, which the LLC records as profit. Once the contractors have disappeared, you have the president resign before law enforcement catches up, have the company bankrupt itself while 'hemorrhaging' money into a series of shell LLCs, then fold before the government catches up to them.

      This is basically the same tact that large scale land developers take every few years to avoid liaiblity when their cheaply made houses/offices from the decade before start to fall apart, allowing them to reorganize and do the same under a new legal entity.

  • (Score: 0) by Anonymous Coward on Monday December 19 2016, @03:33PM

    by Anonymous Coward on Monday December 19 2016, @03:33PM (#443157)

    Maybe not for us mortals, but what would prevent other companies of doing this if this creates a precedence?

    • (Score: 3, Interesting) by vux984 on Monday December 19 2016, @07:06PM

      by vux984 (5045) on Monday December 19 2016, @07:06PM (#443263)

      Maybe not for us mortals, but what would prevent other companies of doing this if this creates a precedence?

      The "one weird trick" that enabled GM to do what it did is that the taxpayer was giving them the money it would need to buy itself out of bankruptcy; and special government oversight specifically to try an ensure business continuity. That's not really an option most companies have.

      For what it's worth it looks like the taxpayer directly lost 10-12 billion investing in the autoindustry. But it may have saved 5-6million jobs, and that would have cost between 40-100 billion in lost tax revenue. So the lesser of two bad choices perhaps.

      More interestingly, the auto bailout program was just small part of TARP, which cost about 420 billion... and has actually recovered about 430 billion. So the taxpayer has actually done ok by tarp. There was definitely some abuse by the so-called 'banksters' ... giving themselves raises and bonuses etc but, big picture, that was small potatoes.

      Arguably things *might* have been even better if we'd let it collapse and the market sorted it out, but while that might have worked out better on the macro level, the churn at the personal level would have ruined 100s of thousands of households even in best case scenarios; and likely handed ownership to chinese and indian and german automakers.

  • (Score: 4, Funny) by ilPapa on Monday December 19 2016, @03:45PM

    by ilPapa (2366) on Monday December 19 2016, @03:45PM (#443164) Journal

    In fact, given that most Americans are in some kind of debt, everybody should go and declare bankruptcy.

    If it's good enough for the new president, it's good enough for us.

    --
    You are still welcome on my lawn.
    • (Score: 0) by Anonymous Coward on Tuesday December 20 2016, @07:56PM

      by Anonymous Coward on Tuesday December 20 2016, @07:56PM (#444004)

      He never has... some of his companies have, but he owns and has owned thousands. 4-6 bankruptcies out of thousands is not the guffaw you'd like it to be.

  • (Score: 1) by AssCork on Monday December 19 2016, @08:59PM

    by AssCork (6255) on Monday December 19 2016, @08:59PM (#443331) Journal

    (or Mr. Robot season 1 or what have you)

    DAMMIT! I knew I should have finished binge-watching it this weekend.

    --
    Just popped-out of a tight spot. Came out mostly clean, too.
    • (Score: 0) by Anonymous Coward on Tuesday December 20 2016, @02:34AM

      by Anonymous Coward on Tuesday December 20 2016, @02:34AM (#443504)

      Elliott files for Chapter 11 after blowing all his money on a l33t new server system, which then gets pwn3d by his creditors.

      As a result of this he finds himself in debtor's prison while continuing to battle with the demons of his past choices. :)