Chrysler Bankruptcy Mid/Late May Roundup and Timeline: Lots to Watch in the Coming Days
For anyone thinking the important part of the Chrysler bankruptcy is just about over, take a peek at the 25-page Notice of Agenda on Matters Scheduled for Hearing on May 20, 2009 which also helpfully lists the various objections filed so far to particular Motions filed by the Debtor. In addition, as of today, more than 900 separate pleadings have already been filed (in the two weeks since Chrysler filed its bankruptcy petition) and many are unresolved at this point. One thing is for sure, however - whatever happens in the Chrysler bankruptcy case this week and next is going to make a BIG difference -- so try to pay attention for a few days.
MAY 19 is a critical day because that is the deadline for filing an objection to the sale itself.
MAY 20 (the day before my 50th birthday) is an equally HUGE day for that is the day by which any competing bids for the purchase of Crhysler's assets as described in its Motion.must be submitted. And of course there are hearings on that day on all those other matters listed in the aforementioned Agenda.
Then, on MAY 27, the actual hearing on whether the sale extravaganza proposed by Chrysler will be permitted to go forward as contemplated will occur. There are already several "limitied objections' of one sort and another filed by several different sorts of parties. It could be the proverbial case of the "1000 cuts" that does Chrsyler's grandiose plans in - we'll have to wait and see,
One of the more interesting objections/challenges to the proposed sale (and attendant bells and whistles in the form of asumption/rejection of contracts) was filed just yesterday (yes in this day and age of electronic filing, you can even file pleadings on the weekends from the comfort of your laptop) as a "Statement' by the Chrysler National Dealer Council. It purports to set forth certain facts which the Council believes the Court should take into account when considering the Motion and claims:
- Dealers produce revenue, not expense for Chrysler.
- Dealers absorb inventory risks.
- Dealers invest in facilities and customer service.
- Maintaining the dealership network is essential to Chrysler's future.
Basic concept is that dealerships are a positive force and shouldn't just be kicked to the curb. Not really any bankruptcy law arguments here, but hey, since we don't appear to be following its provisions anyway (also click here for a similar viewpoint), why not give the political counter-argument.
Closest to home, Ohio Attorney General Richard Cordray has filed a Limited Objection on behalf of the Ohio Bureau of Workers' Compensation which also takes a "consequences of approval" approach to challenging the sale as currently contemplated.. His press release indicates that the objection was made "in an attempt to protect Ohio's worker compensation system". The Limited Objection itself is short and to the point and contends:
- Leaving Chrysler's Ohio workers' compensation liabilities in Old Chrysler is likely to result in Ohio's Bureau of Workers' Compensation picking up the tab because Old Chrysler won't have enough money to pay these obligations. This would be a "devastating blow" to the fundamental structure of the whole system and could harm both other self-insured Ohio employers as well as workers.
- If the sale goes through as contemplated, Chrysler Newco won't be eligible for self-insured status.in Ohio which I think means it would cost it more money to operate in Ohio (to which I suppose one answer is well, we weren't planning on continuing to operate in your State anyway.)
>>>> One interesting thing that had me scratching my head was the Pro Hac Vici Motion to be allowed to participate in the case filed by Victoria Garry, the Assistant Attorney General handling the matter who I am sure is a very good lawyer. She says she is admitted to the bars of the State of Ohio, Sixth Circuit, and Eastern and Western Districts of the U.S. Bankruptcy Court - only thing is that in Ohio there is no Eastern and Western District for Bankruptcy Court; only Southern and Northern.
Oh yeah, there was this Motion to get rid of a bunch of dealerships effective June 9. Objections are due May 26 and a hearing is set for June 3. Here's Chrysler's press release on the subject and the exhibit listing the unlucky dealers. The dealers are located all acorss the nation (well I think Alaska might have escaped) and more than forty (of the 789) are located here in Ohio.
- For an unsual perspective on the dealership closings, visit this Small Town Chrysler... Memories Served post on the Zero Hedge blog which has the interesting tagline "On a long enough timeline, the survivial rate for everyone drops to zero."
- GM sent similar letters to 1,100 dealers on Friday, but has not disclosed the recipients of those letters. In these cases, the current agreements will simply not be renewed later this year. Aprroximately 2,600 more dealerships are also expected to be cut.
So that's some of the most recent highlights of the Chrysler bankruptcy saga and what to look for the rest of the month. Maybe, just maybe, the fat lady hasn't yet sung.
P.S. One of these days I will get back to the old beat and stop writing so much about Chrysler and GM, but that may not be for a while. I'll at least try to slip in some nobankruptcy posts along the way.
