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Chrysler Bankruptcy Proceedings Could Leave Product Liability Lawsuits in the Cold

Automaker Chrysler’s bankruptcy proceedings are leaving more than dealers and workers worried. There’s another class of people who have much to lose if the automaker goes under, and little attention has been paid to their plight.

We are talking about the people who have pending product liability lawsuits against the company. These people will find that their dreams of justice are shattered when the spoils are distributed. Plaintiffs who have filed product liability lawsuits against the company fall in the unsecured creditors’ group. While secured creditors include people who have collateral, unsecured creditors include plaintiffs and other corporations. These creditors are low on the pecking order when it comes to payouts. The secured creditors will get first preference, leaving the remainder of the funds to be distributed among the unsecured creditors. Corporations that are included in the unsecured creditors’ group are likely to demand priority for their funds; leaving plaintiffs with peanuts after all other debts are paid.

According to the New York Times, it’s still not clear how these pending lawsuits will be dealt with. They could be sent back to the original courts for a decision, after which the plaintiff who have won or settled may be able to go to the bankruptcy court for their money.

For these people who have suffered injures because of Chrysler vehicles, the situation seems week. However, the number of such people could rise if General Motors, which has far more numbers of product liability lawsuits, files for bankruptcy too.

Chrysler insists that it will do everything it can to “maintain goodwill with our customers.” The company could have done more than just pay lip service to people who have been injured because of their defective vehicles. According to experts, Chrysler could have intervened, asking the court to give pending lawsuits priority among the unsecured creditors. The company could have cited the need to maintain good customer relations for such a priority request.

It seems to be a familiar scenario – consumer rights are trashed, and they can expect few people, except product liability lawyers to stand up for their rights.