Chrysler reverses direction on lawsuits

Marketplace Staff Aug 28, 2009
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Chrysler reverses direction on lawsuits

Marketplace Staff Aug 28, 2009
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TEXT OF STORY

Bill Radke: When Chrysler filed for bankruptcy, the plan was for the car company to leave all of its old liabilities behind. That included lawsuits filed on behalf of customers injured by Chrysler products. But as Marketplace’s Steve Henn reports, consumer advocates cried foul and last night Chrysler changed direction.


Steve Henn: Chrysler now says future accident victims driving the company’s older models will be able to sue the new Chrysler in court. Prior to yesterday’s announcement the plan was for those suits to be handled by the old shell company.

That old Chrsyler was created by the bankruptcy court. It doesn’t make cars or produce any real income. And it exists solely to pay back pennies on the dollar to thousands of unsecured creditors. Under the old plan any accident victims who successfully sued would have had to get in line with everyone else to get paid.

Not surprisingly consumer advocates blasted that arrangement, and yesterday the company changed course. Chrysler’s reversal follows a similar about face by General Motors. GM had planned to shed future consumer lawsuits in bankruptcy, but gave up the idea under intense pressure form a dozen state attorney generals.

In Washington, I’m Steve Henn for Marketplace.

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