Today's ChryCo C11 Court Docs: Chrysler/Feds Try to Pull A Fast One

by Robert Farago

Published: May 4th, 2009

today s chryco c11 court docs chrysler feds try to pull a fast one

Our C11 guy Toxicroach checks in:Wow, Robert, the more I read of what happened today, the more appalled I am. They filed the motion to sell the assets around 7:30 PM EDT last night. They tried to set the hearing for TODAY at 10 AM. Keep in mind that they hadn’t filed this motion at all until 7:30 PM the day before! That appears to have been denied, or it may have been so fast the court just couldn’t process it. The non-TARP creditors were on the BALL and filed an objection to the motion. So far, it appears that the court hasn’t taken the issue up. It did grant the various preliminary motions (in part) which will allow Chrysler to keep limping along for now.Chrysler/government is even trying to get rule 6004(b) waived, which would give the creditors 10 days to appeal if the order went through (i.e., they want to get this done so that an appeal is moot because the sale is completed). They are trying to bull rush this through. Wow, this is really starting to piss me off! In short, they were trying to pull a fast one. They take it easy Saturday and most of Sunday, drop the CRITICAL motion at 8 PM on Sunday evening, asking that the hearing to approve the motion be held the very next day (never mind the local rule requiring 20 days notice), AND try to deny the creditors the time to appeal. Wow, that is such a scumbag move!Kudos to Gerard Uzzi for anticipating this. My immediate and hurried impression is that this was a bit of a desperation play by Chrysler. This sort of brinksmanship is not the behavior of people who think they have a solid legal case. This is the behavior of people who want to avoid scrutiny and were hoping to catch the creditors sleeping.I’m not sure what this says about Chryslers opinion of Judge Gonzalez. If they thought he was totally in the bag, they wouldn’t bother with these cheap tricks. But if they don’t think he’s in the bag, they will have to use two Dodge Dakotas to tow each of their massive balls into the courtroom after this shenanigan.Anyway, the non-TARP lienholders are not planning on taking this sitting down. They have, oh, all of bankruptcy law on their side. And they plan on using it. Huzzah!“The first objection is to their motion to continue to pay pre-petition obligations ( download pdf here). Essentially, the non-TARPies are arguing that there is no real intent for Chrysler to be a ongoing business, since the plan is to sell everything to newco anyway, and that the motion to pay prepetition obligations is just a way to deplete the bankruptcy estate of its value before selling it to Newco for a song. In other words, it’s a “ sub rosa” plan to screw the bondholders. And he has a good point.1. MASTER TRANSACTION AGREEMENT among FIAT S.p.A., NEW CARCO ACQUISITION LLC, CHRYSLER LLC and the other SELLERS identified herein. ( download pdf here)2. ORDER, PURSUANT TO SECTIONS 105, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 6004 AND 6006, (A) APPROVING BIDDING PROCEDURES FOR THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS, (B) AUTHORIZING THE DEBTORS TO PROVIDE CERTAIN BID PROTECTIONS, (C) SCHEDULING A FINAL HEARING APPROVING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS AND (D) APPROVING THE FORM AND MANNER OF NOTICE THEREOF. ( download pdf here)3. MOTION OF DEBTORS AND DEBTORS IN POSSESSION, PURSUANT TO SECTIONS 105, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 6004 AND 6006, FOR (I) AN ORDER (A) APPROVING BIDDING PROCEDURES AND BIDDER PROTECTIONS FOR THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS AND (B) SCHEDULING A FINAL SALE HEARING AND APPROVING THE FORM AND MANNER OF NOTICE THEREOF; AND (II) AN ORDER (A) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS, FREE AND CLEAR OF LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (B) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION THEREWITH AND RELATED PROCEDURES, AND (C) GRANTING CERTAIN RELATED RELIEF. ( download pdf here)

Robert Farago

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AnalogKid on May 05, 2009

Ronnie & Mike, The secured bondholders were asked to accept $0.29 on the dollar on about $6.9 billion of debt. Lenders holding 70% of the outstanding debt agreed. The UAW stake is over $10 billion and the taxpayer stake is about $4.5 billion with up to another $6 billion in DIP financing. Those are the numbers. If you accept the premise that it is worthwhile to try to prevent the economic consequences of Chrysler liquidation, (if you don't then you can stop reading now) then the primary goal is to have them emerge from a Chapter 11 proceeding with a fair shot at making it. Obviously the holdout creditors would prefer Chapter 7, either because they think they will get more than $0.29 (extremely doubtful in my view) or because they hold credit default swaps that will pay them out in Chapter 7 (or both.) Why are you telling me that I need to care about them as employees, then they care about their own company? I'm not sure what you mean by this, but what I was referring to is the total economic fallout to employees, suppliers and the regional economy. Either you care about that or you don't (and if you don't it's probably because you don't live there.)

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Taymere on May 05, 2009

Thanks for giving some perspective chuckR. These creditors are like the original patriots shouting "No taxation without representation!" They are fighting for their economic freedom against a powerful government. I hope the judge recognizes that as a Federal employee he risks being perceived as President Obama's tool. What I hope is that this proceeding is done carefully and correctly. Nothing could be better for the stock market than injecting the rule of law into this politicized Wall Street vs K Street battle. Shenanigans like Rattner and Mr. Obama tried to pull result in capital flight. I am a GM bondholder and I hope we creditors teach them a lesson on Chrysler so that they'll start negotiating in good faith in GM. Like Malcolm X said, you have to speak to them in a language that they understand. Only the Native American tribes that fought the USA are recognized by the government and have treaty rights. The ancestors of those tribes died fighting so that their descendants have some shred of rights today. They had to fight hard enough and well enough to make the USA desire a treaty. Those that didn't fight at all the USA considered their "friends", they were pushed off their land and hunted down like dogs, the USA left them completely landless and rightless and they and their descendants have largely disappeared from the face of the earth. Appeasing the USA is a fatal strategy, one must fight fight fight otherwise Uncle Sam will take it all without a kiss and a dance.

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