GM Could Face Bankruptcy Fraud Allegations

The recall of some 1.6 million vehicles last month has the eyes of authorities all over the potential  mishandling of problems by GM. This week, authorities are now taking a closer look as to whether GMs actions could spiral from negligence into bankruptcy fraud.

Suspicions Over The Switch

GM recalled over a million and a half vehicles last month after information about a faulty ignition switch surfaced.  The switch has been linked to 12 fatalities and countless injuries since the early 2000s. So far attention has surrounded the allegations of whether GM had prior knowledge of the problems and failed to recall the vehicles years ago. However, last week federal authorities stepped in to investigate how this prior knowledge was managed in their bankruptcy filing back in 2009.

GM could soon be facing some serious allegations and charges of bankruptcy fraud if authorities determine that GM did, in fact, hide information about the ignition switch when it filed for bankruptcy. If it is determined that GM hid the information the current lawsuits over negligence for failure to recall could hold the old, pre-bankruptcy GM liable for the lawsuit settlement.  Unfortunately for GM, this is one of several lawsuits filed against the company since the recall.