Consumer claimants ask to take GM appeal to circuit

By Emily Chasan

NEW YORK, July 7 (Reuters) - A group of individuals that claim they were harmed by General Motors Corp GMGMQ.PK vehicles are seeking to take their appeal of the automaker's asset sale directly to a U.S. federal appeals court, according to court papers on Tuesday.

Late on Sunday, U.S. Bankruptcy Judge Robert Gerber approved GM's plan to sell its most profitable assets to a "New GM" funded by the U.S. government. [ID:nN06331880]

Normally, appeals of bankruptcy court decisions are made in the district court, but due to the speed sought in the case they may be able to skip that step. The U.S. government has said it will drop funding for GM if the sale is not approved by July 10.

The consumer group, along with a group of asbestos claimants who are joining in the appeal, are seeking to overturn Judge Gerber's decision, because the "New GM" is being created from assets sold "free and clear" of such claims and they would be unable to sue. If the sale goes ahead, the injured individuals would have to seek recourse from the "Old GM" left in bankruptcy court where they will not be able to recover much.

The asbestos claimants have also filed court papers seeking a stay of the sale that would delay it from taking effect until after the results of the appeal.

"Many unfortunate GM product victims have suffered enough, and should not be forced to suffer through multiple layers of appeal," lawyers for the consumer claimants wrote in the request.

Judge Gerber has set a court hearing to discuss the appeal for 7 p.m. on Tuesday.

In his opinion approving the sale, Judge Gerber had written that the liability objection was the only "truly debatable" issue he had heard in the GM case, but ultimately agreed with GM that it was necessary to allow the company to leave such claims behind.