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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: 2) by driven on Monday December 19 2016, @02:15PM
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
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.