June 3, 2014 at 10:55 pm

GM adviser: Decision on victims compensation 'weeks away'

Ken Feinberg (Getty Images)

Ken Feinberg, the victim compensation expert retained by General Motors Co. to advise the Detroit automaker on whether it should compensate victims of crashes linked to defective ignition switches, said Tuesday that a decision on compensation is “weeks” away.

Feinberg’s comments come as GM could announce as early as this week the internal investigation by a former U.S. attorney into the company’s handling of a recall of 2.6 million vehicles for ignition switch problems linked to 13 deaths and at least 47 crashes.

“I will not be announcing any compensation plan this week,” Feinberg said in an email. “My work continues. I am still a few weeks away. GM may be making some type of announcement but it will not include any details about a compensation plan since no such plan yet exists.”

Feinberg began meeting with lawyers representing victims of crashes linked to ignition switch defects in early May.

GM CEO Mary Barra disclosed Feinberg’s hiring in April and said she hoped he would help the company make a decision in 45 to 60 days on whether to create a fund. U.S. Sen. Richard Blumenthal, D-Conn., and safety advocates want GM to create a fund of at least $1 billion. Blumenthal suggested last month it should be $3 billion to $8 billion.

GM spokesman Greg Martin declined to comment Tuesday on Feinberg’s timetable.

Barra met on Capitol Hill late last month with members of Congress, but told members the company hasn’t decided on whether it will offer compensation.

Feinberg, 68, is known for working with compensation funds related to the 9/11 terrorist attacks, the Virginia Tech shootings in 2007, the BP Deepwater Horizon oil spill in 2010 and the Boston Marathon bombing in 2013. He was appointed by the U.S. Treasury to oversee compensation of executives at corporations that received federal bailout assistance, including GM and Chrysler Group LLC in 2009.

“We feel that Mr. Feinberg has had extensive experience, and he will bring his experience and objectivity to assess what are the appropriate next steps,” Barra told a House panel in April. “Because we do understand we have civic responsibilities as well as legal responsibilities.”

GM is fighting efforts in U.S. Bankruptcy Court over suits that want GM to pay claims covering loss of value for the recalled cars. It also is fighting suits that want GM to pay penalties because it didn’t tell buyers about the problems when it sold the cars.

As part of its $50 billion government bailout, GM became a new company in July 2009 when it exited bankruptcy. It left behind billions in bad debts and liabilities, including product liability claims for all crashes occurring before that date, as well as toxic waste left behind at abandoned factories. Old GM — formally renamed as Motors Liquidation Corp. in 2009 — was dissolved in December 2011 and converted into a trust that continues to wind down by paying some claims.

Meanwhile, the Justice Department is investigating whether GM committed bankruptcy fraud by failing to disclose the defects at the time of the bankruptcy. GM has been hit with numerous lawsuits after it acknowledged it first knew of ignition switch problems in a pre-production Ion in 2001 and then didn’t recall the vehicles for more than a decade.

The company maintains it is not seeking to use the shield to protect itself from crash victims, but only broader economic loss claims, including diminished value of recalled cars.

GM lawyer Arthur Steinberg said in a court hearing in May that additional compensation for some of them is among the issues that Feinberg is analyzing at GM’s request.

Steinberg said funds remain in the old GM trust and it should be considered a source to pay claims. But Steinberg said Feinberg is focused on claims to people who were injured in alleged ignition switch-related crashes, not economic loss claims. Steinberg said GM has acted responsibly.

Feinberg was tasked with placing monetary values on victims of the Sept. 11, 2001, terrorist attacks. The 9/11 Victim Compensation Fund distributed about $7 billion to more than 5,000 victims and the families of victims. Feinberg has worked on some of the largest asbestos lawsuits and worked on a class-action lawsuit that involved Vietnam War veterans and their families against the manufacturers of Agent Orange, a herbicide sprayed by the U.S. military during the war.

Barclays PLC said in April that “GM could set up a trust to pay old claims and government fines while shielding new GM,” and the the company’s total costs from the recall could reach $2.5 billion to $3.5 billion.

dshepardson@detroitnews.com