: Is factory warranty valid if GM files bankruptcy



bigsky189
03-05-09, 06:52 PM
With everything going on in the economy and the increased potential that GM may have no other alternative then to file for for Chapter 11 protection. Does anyone know if factory warranty will be invalid or limited in any way?

c5 rv
03-05-09, 07:30 PM
A chapter 11 filing, reorganization under court supervision, would likely have no effect on warranty coverage. The goal is to return the company to a profitable venture and emerge from bankruptcy protection. This is what is most likely to happen to GM, with government backing of debtor in possesion loans. However, a chapter 7 filing, liquidation, may have far different results. Another automaker could buy the assets and continue to honor the warranty - or not.

smokiejoe
03-06-09, 09:58 AM
Interesting, because it never happened before.

Think of this. If warranty is no longer valid, GM has defaulted on their promise of warranty, might I stop monthly payments to GMAC for vehicle, or just simply take back a leased vehicle, due to warranty default.

Actually, If GM files it would be a prepackaged Bankruptcy, everything will be pre-planned. I am sure warranties will be kept intact.

Anyone have additional comments?

jdavis
03-06-09, 10:57 AM
Anything short of a chapter 7 bankruptcy will leave your warranty in tact. Dealers would have a difficult time selling cars without GM backed warranties. However, with a chapter eleven, you will see the number of dealerships reduced which might make finding a local dealer more difficult that it has been in the past.

Klei14
03-06-09, 12:56 PM
Anything short of a chapter 7 bankruptcy will leave your warranty in tact. Dealers would have a difficult time selling cars without GM backed warranties. However, with a chapter eleven, you will see the number of dealerships reduced which might make finding a local dealer more difficult that it has been in the past.

Alot of local dealers are already closed here in ny.

Circuit city went out of business and they had to honor all warrentys on products they sold. When you buy the vehicle you are paying a lump sum to warranty the car for a certain amount of years. Only problem is, I don't know what would happen if they close all dealers, won't be anywhere to service the car. I'm sure deep deep within the 23460736765437437856437 page warranty contract it probably says something about what would happen if GM were to no longer exist.

TTopJohn
03-06-09, 03:24 PM
Bankruptcy wipes out a certain group of obligations. However, among this group of obligations, the entity going through bankruptcy can elect to reaffirm certain agreements, so that the entity is still obligated to perform under those agreements even after bankruptcy.

The warranty obligation is one that would certainly be reaffirmed, simply because of how hard it would be to sell cars in the future if you were known as "the company that wrote off all its warranties in bankruptcy."

Jake's SRX
03-06-09, 03:38 PM
When we purchase our 2005 SRX (2 weeks ago) we did get GMPP and was told that the company that actually covers this is one called MCI, and we would have continued coverage.

bigsky189
03-06-09, 06:52 PM
Everyone on the post, I appreciate your feedback and you confirmed my thoughts that the factory warranty would stay in effect. I concurr that a chapter 7 filing would be highly unlikely as the government would not allow that to happen. I have 1 1/2 years on left on my warranty but chose not to purchase an extended warranty from GM as the Chevy dealer i purchased it from had no idea how a bankruptsy would impact the policy.

louisn
03-06-09, 08:07 PM
Bankruptcy wipes out a certain group of obligations. However, among this group of obligations, the entity going through bankruptcy can elect to reaffirm certain agreements, so that the entity is still obligated to perform under those agreements even after bankruptcy.

The warranty obligation is one that would certainly be reaffirmed, simply because of how hard it would be to sell cars in the future if you were known as "the company that wrote off all its warranties in bankruptcy."
"reaffirmation" is a term of art. Debtor ahould never do it unless the creditor will take possession of some form of collateral unless the debt is reaffirmed. GM may honor or modify warranties but I doubt they will reaffirm.

TTopJohn
03-08-09, 02:49 PM
"reaffirmation" is a term of art. Debtor ahould never do it unless the creditor will take possession of some form of collateral unless the debt is reaffirmed. GM may honor or modify warranties but I doubt they will reaffirm.

In some cases a debtor will reaffirm certain obligations for goodwill reasons - for example, to stay on good terms with a creditor if that creditor is essential to the debtor's business plan to continue as a going concern after the bankruptcy discharge. Here, I think the owners of GM cars new enough/low mileage enough to have factory warranties still in place are just such a group of creditors.

louisn
03-08-09, 07:57 PM
In some cases a debtor will reaffirm certain obligations for goodwill reasons - for example, to stay on good terms with a creditor if that creditor is essential to the debtor's business plan to continue as a going concern after the bankruptcy discharge. Here, I think the owners of GM cars new enough/low mileage enough to have factory warranties still in place are just such a group of creditors.
Reaffirmation is generally only used in Chapter 7--And requires court approval. Usually a bad thing deal for the debtor. GM can continue to do business in a Chpt. 11 and honor the warranties and GMPP but all bets are off. That is not a reaffirmation which has a VERY specific definition in bankruptcy.:alchi:

Permnico
03-12-09, 09:11 AM
you say to-may-to, I say to-mah-to... Sounds like two lawyers at a cocktail party... how droll...
Bankruptcies are wonderfully complex undertakings designed by lawyers to optimize firm revenue... Pretty safe bet that should GM file and before they emerge all our SRX's will be beyond current lease or extended warranty periods...

louisn
03-12-09, 05:43 PM
you say to-may-to, I say to-mah-to... Sounds like two lawyers at a cocktail party... how droll...
Bankruptcies are wonderfully complex undertakings designed by lawyers to optimize firm revenue... Pretty safe bet that should GM file and before they emerge all our SRX's will be beyond current lease or extended warranty periods...
Typical: blame the lawyers....WRONG--bankruptcy law is as old as the Bible and specifically allowed in the US Constitution. It is designed to help debtors get a fresh start. It's not as complicated as you might think. Blame GM or the economy but the bankruptcy system and the lawyers are a symptom NOT the cause. Reaffirm that!!!!!!!!!!!!!!!!:welcome:

jwoodie
03-15-09, 01:16 AM
The trouble is 99% of the lawyers give the other 1% a bad name (I should know).

louisn
03-15-09, 08:23 AM
The trouble is 99% of the lawyers give the other 1% a bad name (I should know).
How many years did you get??:thehand:

Fyreman235
03-15-09, 09:01 PM
A pre-planned chapter-11 would definitely cover warranties. GM would never sell another vehicle if there was concern for the warranties. Maybe the government would guarantee them. After all, a few more billion would never even be noticed. Anyway, to follow up on the previous two posts: These two lawyers walked into this bar.......................