U.S. eyes bankruptcy hyperlink in GM ignition defect probe, report says

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March 22, 2014 – 3:48 pm ET

WASHINGTON (Reuters) — Federal authorities are investigating no matter whether Standard Motors hid an ignition switch defect when it filed for bankruptcy in 2009, The New York Instances reported on Saturday.

The Justice Department’;s investigation of the automaker consists of a probe of no matter whether GM committed bankruptcy fraud by not disclosing the ignition dilemma, a particular person briefed on the inquiry told the Occasions on Friday, the paper stated.

Authorities also are investigating whether or not GM understated the defect to federal safety regulators, the Instances said. The ignition switch issues led to the recall of one.6 million autos final month.

GM has handed more than documents to federal investigators in New York, the individual, who was not identified, told the Occasions.

The automaker are not able to comment exclusively on the Justice Division investigation, spokesman Greg Martin said in an e-mail on Saturday. “We are cooperating completely with authorities on several fronts and we will continue to do so,” he stated.

The investigation is currently being run by FBI agents and federal prosecutors who worked on the fraud situation against Toyota that ended in a $ 1.2 billion settlement last week, the paper mentioned.

On Wednesday, GM was hit with a lawsuit demanding that the company be held liable for allegedly concealing ignition difficulties just before its 2009 bankruptcy.

GM is a different legal entity than the one particular that filed the 2009 bankruptcy that shook the U.S. economy. The so-known as new GM is not accountable beneath the terms of its bankruptcy exit for legal claims relating to incidents that took location prior to July 2009. Individuals claims need to be brought towards what remains of the “outdated” or pre-bankruptcy GM.

But the proposed class action, filed in federal court in California, said plaintiffs need to be allowed to sue more than the pre-bankruptcy actions “due to the fact of the lively concealment by Previous GM and GM.”

The lawsuit also stated GM was accountable for reporting to the federal government any security-connected difficulties for autos manufactured just before its bankruptcy.

It is one particular of numerous lawsuits filed against the firm since the recall was announced.

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