GM may be liable to face damages via lawsuits over the ignition switch problem that led to millions of vehicle recalls in 2014.

General Motors may face damages through lawsuits relating to the ignition switch problem that prompted a recall of millions of cars in 2014 according to the decision taken by US Bankruptcy Judge Robert Gerber in Manhattan. This could result in heightened financial exposure due to injury claims, deaths and vehicle value losses. Punitive damages are usually meant to punish defendants for negligent or erroneous conduct and prevent future relapses. Punitive damages may be sought on the basis of documents and employee knowledge in addition to conduct.

The bankruptcy of the company in 2009 led to a split with the new entity snapping up profitable businesses and the old entity keeping the heavy liabilities. The new entity has agreed to bear liability for injuries or deaths involving old General Motors cars post sale. Limited liability has been invoked by the company to tackle lawsuits in some cases post the discovery of faulty ignition switches in older cars that led to stalling and cutting of power to air bags, brakes and steering wheels. The decision made by Gerber will be manifested through judges in other courts courtesy individual lawsuits. These include the US District Judge Jesse Furman who presides over 200 consolidated lawsuits in the federal court of Manhattan.

The company announced in September this year that it had already garnered agreements to settle approximately 1, 380 death and injury cases for an amount that was undisclosed. However, a minimum of six lawsuits are still up for trials from the beginning of 2016 onwards. The company is also facing action from vehicle owners relating to the loss of value of their vehicles owing to the ignition switch fiasco. What this does to GM’s reputation in both the US and key markets like India is yet to be ascertained.