EXTRA! EXTRA! Get Your Chrysler Bankruptcy Info Here!
When you think the Chrysler bankruptcy is one of the most intellectually fascinating things ever to come down the pike ('cept maybe the coming GM extravaganza) and there's more interest amongst the general public in the swine, aka H1N1, flu, you know you're a purebreed bankruptcy law wonk. For those of like persuasion or who just want a handy reference guide, here's the basic 411 on the Chrysler bankruptcy:
- We must of course begin with the Chrysler's press release.
- In what might be seen as a dry run for a GM filing in about a month, Chrysler LLC and many of its subsidiaries and affilated companies filed Chapter 11 bankruptcy on April 30, 2009 - which now becomes the "Petition Date", an important dividing line -- in the U.S. Bankruptcy Court for the Southern District of New York, Case No. 09-50002. After only one day, there were already more than 130 pleadings filed. By Sunday afternoon, the Court's docket sheet shows 189 pleadings.
- For those with PACER access, the Bankruptcy Court has established a separate URL for Chrysler pleadings
- For those without access to PACER, the case can be followed directly by visiting the Chrysler Restructuring website which contains a docket containing PDFs of all of the court pleadings, as well as press releases by the company, and information and FAQ for various sorts of creditors and stakeholders. For those living under a rock for the past few months, it also has this useful Chapter 11 Fact Sheet
- The case has been assigned to Judge Arthur J. Gonzalez whose biographical information is available on the website for the U.S. Bankruptcy Court for the Southern District of New York. He joined the bench in 1995 and previously handled the bankruptcies of Enron and WorldCom simultaneously. For more information about Judge Gonzalez, click here.
- Chrysler will be represented by the international law firm of Jones Day, headquartered in Cleveland, Ohio, led by Corinne Ball out of the firm's New York office. Click here for a recent interview with Ms. Bell.
- Both AP and NYT provided helpful FAQ about the filing and its meaning.
- For a very brief overview of key components in the Chrysler bankruptcy filing, visit, "Chrysler Says 38.000 Jobs Would Be Lost if Liquidated" at Bloomberg.com
- The Chrysler bankruptcy petition is fairly unremarkable except that it includes identification of the Fifty Largest Unsecured Creditors instead of the usual Twenty Largest .
- For those wanting an in-depth overview of how Chrysler sees the game plan, the Affidavit of Ronald E. Kolka in Support of First Day Pleadings is a "must'" read.
- More than TWENTY "first day" motions were filed. Sparing you the long technical description, these essentially dealt with the following:
- Procedural
- Joint Administration of bankruptcies of all Chrysler entities. Intended to increase efficiencies. Cases not "substantively consolidated" and debts and creditors of each entity remain separate. GRANTED
- Reassurance regarding application of automatic stay and related provisions of Bankruptcy Code
- Seeking permission to file consolidated list of Top Fifty Unsecured Creditors instead of each entity having to file their own Top Twenty
- Appointment of Epiq Bankruptcy Solutions, LLC as Claims and Noticing Agent - basically an outsourcing of the procedural aspects of proof of claim filing and general noticing; very common in large bankruptcies
- Seeking to extend deadline for filing bankruptcy schedules and statement of financial affairs '[d]ue to the substantial size, complexity and geographic reach of their operations and the press of business preceding the filing of these cases" -- very common in large cases; nornally these would be due within fifteen days after the Petition Date (or May 15, 2009).
- Procedures for the assertion and resolution of claims involving recently delivered goods and reclamation claims
- Compensation arrangements for professionals, i.e counsel for Chrysler and related professionals
- Seeking expedited" hearing on "first day" motions
- Establishment of case management and scheduling procedures
- Retention of counsel and other professionals for Chrysler
- Permission for Jones Day attorneys not admitted to practice in New York to participate in case
- Commercial Relations
- Payment of prepetition wages and benefits of employees to some extent
- Honoring warranties and similar obligations
- Continuation of workers' compensation programs
- Reassurance of administrative priority for obligations incurred AFTER the Petition Date
- Continuation of utility services - OBJECTION to Motion has been filed
- Payment of prepetition obligations to certain "essential' suppliers
- Payment of certin prepetition obligations to lienholders such as shippers, warehousemen, custom brokers, tooling suppliers, and artisans and repairmen
- Payment of certain prepetition taxes
- Provision of adequate protection to parties holing production tooling to allow revovery of same by Chrysler
- Rejection of certain real estate leases in California, Hawaii, Indiana, Louisana, Michigan, New York, and Texas
- Business Operations
- Permission to continue using cash management system
- DIP finanancing
- Procedural
- Here's a wrap-up of Friday's hearing.
- The United States Treasury issued this press release (and the White House issued an identical press release) describing the government's view of the proper exit plan for Chrysler
- The Am Law Daily takes a look at the holdout secured creditors.
- A media teleconference presented by the American Bankruptcy Institute can be heard by clicking here and following instructions
- Chrysler 'first day" motion hearing Round II kicks off on Monday, May 4, 2009 at 10 AM; spectators may use this handy agenda prepared by Jones Day to keep up
- Chrysler has filed the expected 363 motion seeking to sell its viable assets to Fiat.. Attached to the Motion is a 96-page Purchase Agreement There is also a 40-plus page Memorandum of Law setting out the basis for the Motion. In addition, there is a Declaration of Bradley A. Robins in Support of the Sale of the Debtors' Assets to New Chrsyler has been filed. This is essentially a valuation support to support the proposed purchase price to be paid by Fiat. Hat tip to Burbage Waddell which also provides this summary of the "fairness" opinion
>>>> and finally, some interesting commentary from some of my fellow bloggers:
- Stephen Sather of A Texas Bankruptcy Lawyer's Blog focuses on the terms of the sale to Fiat as outlined by the U.S. Treasury in "Chrysler Seeks the Ultimate 363 Sale as the Treasury Department Dictates the Pace"
- Steve Jakubowski of The Bankruptcy Litigation Blog has a terrific two part analysis - first "Assessing the Financial Carnage" which looks at the creditors overall and then"Testing the Limits of Section 363 Sales" which focuses more specifically about whether a 363 sale outside the boundaries of a plan is really appropriate.
UPDATE: After a three day hearing which extended into the evening each day, closing arguments were made late Friday afternoon and early evening. Judge Gonzalez is expected to give his ruling regarding the 363 sale sought by Chrysler on Monday morning, June 1. It is likely that whatever the ruling, it will be immediately appealed. And yes, Monday is also the day GM is expected to file its Chpater 11 petition. BIG BIG day for all of us bankruptcy nerds!!
For more information about 363 sales, visit my post 363 Bankruptcy Sale - What You Need to Know to Understand What's Going On with Chrysler and GM
UPDATE (6/1/09) Late Sunday night, judge Gonzalez issued an opinion approving the proposed sale.
Very informative post. you gave a very good detailed description