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Asset Sales & Bankruptcy Litigation

Lack of Prejudice Defeats Procedural Due Process Claim of Plaintiff Class

By: Bryant Churbuck

St. John's Law Student

American Bankruptcy Institute Law Review Staff

In In re Motors Liquidation Co., the Bankruptcy Court of the Southern District of New York held that the class of "Pre-Closing Accident" plaintiffs would be unable to proceed with their personal injury claims against the new General Motors (“GM”), rather than the old GM , because they suffered no prejudice to support a procedural due process violation, despite the fact that the notice by publication given to the "Pre-Closing Accident" plaintiffs was insufficient. In Motors Liquidation, several classes of plaintiffs were asserting claims related to an ignition switch defect that was known by GM as far back as 2003. At least 24 GM business and in-house legal personnel employees knew about the ignition switch defect at the time of GM's 2009 chapter 11 bankruptcy case and section 363 Sale Order. On July 10, 2009, the sale of Old GM in accordance with the Section 363 Sale Order closed, forming the new GM. In the Spring of 2014, GM finally recalled the vehicles with the faulty ignition switch issue. Shortly thereafter, GM announced the ignition switch defect, resulting in several class action lawsuits.