Chrysler and General Motors were released of some legal liability for product defects, the Wall Street Journal reported today. As a result, the automakers do not have to pay out damages to car-accident victims [1] who had lawsuits pending or had already won damages before the companies filed for bankruptcy.
University of Pennsylvania law professor and bankruptcy expert told the Journal that it's an unusual case [1] of the government picking winners and losers. With mixed legal precedents on the issue, federal bankruptcy judges prioritized certain lenders—the U.S. Treasury, for one, received huge ownership stakes in the two companies—and left car accident victims in the lurch.
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