Elliott v. General Motors LLC (2016)
Citation: 829 F.3d 135 · Court: U.S. Court of Appeals for the Second Circuit · Decided: July 13, 2016 · Opinion: Chin, Circuit Judge.
Source note (2026-10-18):
- source replaced 2026-10-18: static.case.law robots-disallowed; official copy at GovInfo USCOURTS collection (U.S. Government Publishing Office), Second Circuit No. 15-2844 (replaces
https://static.case.law/f3d/829/cases/0135-01.json; retrieval dates stated elsewhere on this page refer to the earlier copy).
Case page. Legal information, not legal advice. Last verified: 2026-10-16.
Facts
In 2009 General Motors (“Old GM”) sold substantially all its assets under § 363 to “New GM” “free and clear of liens, claims, encumbrances, and other interests.” Years later the ignition-switch defect became public. Plaintiffs with pre-closing accident claims, economic-loss claims, claims based on New GM’s own conduct (“independent claims”), and claims of people who bought used Old GM cars after the sale sued New GM. New GM moved in the bankruptcy court to enforce the sale order. The bankruptcy court found the plaintiffs had not received notice consistent with procedural due process but enforced the order anyway, except for independent claims, on the ground that they were not “prejudiced.” (Source: https://www.govinfo.gov/content/pkg/USCOURTS-ca2-15-02844/pdf/USCOURTS-ca2-15-02844-0.pdf , retrieved 2026-10-16.)
Holding
The court of appeals:
“(1) AFFIRM the decision not to enforce the Sale Order as to the independent claims; (2) REVERSE the decision to enforce the Sale Order as to the Used Car Purchasers’ claims and claims relating to the ignition switch defect, including pre-closing accident claims and economic loss claims; (3) VACATE the decision to enforce the Sale Order as to claims relating to other defects; and (4) VACATE the decision on equitable mootness as advisory.”
Reasoning
- Scope of the order. Pre-closing accident claims and economic-loss claims were covered by the sale order; independent claims (based on “New GM’s own post-closing wrongful conduct”) and used-car purchasers’ claims were not.
- Notice. “If the debtor knew or reasonably should have known about the claims, then due process entitles potential claimants to actual notice of the bankruptcy proceedings, but if the claims were unknown, publication notice suffices.” Ignition-switch claimants “were entitled to notice by direct mail or some equivalent.”
- Prejudice. “We need not decide whether prejudice is an element when there is inadequate notice of a proposed § 363 sale, for even assuming plaintiffs must demonstrate prejudice, they have done so here.”
Subsequent history
General Motors LLC’s petition for certiorari, No. 16-764, was “DENIED” on April 24, 2017 (https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/16-764.html , retrieved 2026-10-16).
Practical impact
For a buyer at a § 363 sale, “free and clear” protection against successor claims is only as good as the notice given to claimants the debtor knew or should have known about; and no sale order protects against claims based on the buyer’s own post-closing conduct. For claimants, inadequate notice can leave the claim enforceable against the buyer.
Good-law status
Certiorari denied. No citator check run this session (needs_verification).
Applies in →
businesses-and-going-concerns, bankruptcy-363-sales, due-process-notice
Legal information, not legal advice. Verify against the current primary source before relying on this summary.