Section Review

Section Review runs practice area-specific articles as part of the MBA's bi-monthly Lawyers Journal.

Issue November 2015

November 2015

Bankruptcy Court rules successor ignition switch defect claims are barred against ‘New GM’

In the depths of the 2008 financial crisis, General Motors (Old GM) filed the fourth-largest bankruptcy in the history of the United States, seeking approval to sell substantially all of its assets to a newly formed entity (New GM) "free and clear" of its legacy liabilities. At the time, Old GM was bleeding cash and surviving only thanks to emergency loans from the federal government, earning it the dubious nickname "Government Motors." That sale -- totaling approximately $82 billion -- was approved within 40 days of the bankruptcy filing and allowed New GM to emerge from bankruptcy a more financially stable company.

‘Lightlab’ and first mover advantage

First mover advantage (FMA) is the market advantage that a firm gains for being first with a product. In LightLab Imaging Inc. v. Axsun Technologies Inc. & Another, SJC-11374, July 28, 2014, the Supreme Judicial Court affirmed a decision to deny lost profits claimed, in part, based upon the plaintiff's assertion of FMA. The trial court had not rejected the FMA concept per se, but found no evidence of loss and the methodology deficient "particularly as to quantification."