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Accident victims in GM appeal

GROUPS representing plaintiffs in car accidents are to oppose General Motors' attempt to quickly exit bankruptcy protection, arguing that hundreds of victims could be hurt by the government-led plan.

United States Judge Robert Gerber approved a crucial step of the plan on Sunday, allowing the troubled auto maker to sell its assets to a new company and saying the deal was in the best interest of both the auto maker and its creditors, who would get nothing if the auto maker was forced to liquidate.

The Detroit car maker's bankruptcy protection filing on June 1 was the fourth-largest in US history.

General Motors and the Obama administration praised the judge's decision but opponents prepared an appeal to the US District Court in New York. A Chicago law firm representing people who have sued GM in several auto accident cases said they objected to parts of the plan that would free the "new GM" from liability for people injured by a defective GM product before June 1.

Steve Jakubowski, who filed the appeal notice for the accident litigants, said his appeal would assert that the bankruptcy judge overstepped his authority by preventing victims from pursuing litigation under their state product liability laws.

Potential damages

He estimated that about 1,000 lawsuits could be pending with potential damages in the range of hundreds of millions of dollars.

"It affects virtually every walk of life in this country," he said.

The deadline to appeal the case to the District Court is noon tomorrow.

Steve Rattner, the head of the Obama administration's auto task force, said the government was "confident that decision will stand and the sale of GM's assets to new GM will proceed expeditiously."

GM and government officials had urged a quick approval of the sale, saying it was needed to keep the auto maker from selling itself off piece by piece.

The Treasury Department, expected to provide about US$50 billion in aid to the auto maker, says it will cut off funding to GM if the sale doesn't go through by Friday.

"It's our responsibility to fix this business and place the company on a clear path to success without delay," GM CEO Fritz Henderson said.

Litigants injured by a defective GM product before June 1 would have to seek compensation from the "old GM," the collection of assets leftover from the sale, where they would be less likely to receive compensation.


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