Chrysler to Emerge From C11 on Monday

June 6th, 2009 1:03 AM

Provided, that is, the Supreme Court of the United States (SCOTUS) turns down Indiana’s request to overrule the sale of assets from Old, Crap Chrysler to New, Italian-controlled Chrysler. This after the U.S. Appeals Court told the gearbox-factory-jilted state’s lawyers to piss off. Or, more specifically, “You can’t wait for a better deal to come in from Studebaker.” Wait schmait; the three judges returned their decision about 10 minutes after Indiana’s lawyers finished their arguments. “There’s one more stop on the train,” Tom Lauria, a lawyer for the Indiana pension funds said, after the court’s ruling. Yes, well, New Chrysler left the station a while ago. One of our Best and Brightest has an interesting take on this (after the jump), but again, I reckon this is a done deal.

A TTAC commentator e-mails:

Well, a very interesting conference there will be at SCOTUS on Monday!

Assuming that there are no self-recusals for stock ownership (but shouldn’t they all recuse because they are taxpayers?), I can envision a scenario where Alito, Roberts, Thomas, and Scalia find likelihood of success and therefore would preliminarily enjoin the sale pending expedited briefing and argument.

However, then one of the others says, “Look guys, you can get this case heard, but you are going to lose 5/4, and in the interim FIAT walks away, and then it’s all OUR fault. So, suck it up, and take one for the team.”

Except, seeing as Congress declined to give TARP funds to the automakers… do the institutional aims of SCOTUS usually include allowing the Executive branch to rule by fiat? (Sorry, could not resist. RF, feel free to use, but don’t attribute.) But I think the only way that the four named above can get another vote is to appeal to the others’ amour-propre and not to the rule of law!

It is actually a very “nice” legal issue: “As long as there is some non-trivial amount of competent evidence that the Ch. 11 plan gives the objecting creditor more than a Ch. 7 liquidation would, does that fact that a non-objecting creditor get treated even better invalidate the Plan?” (We can call it the ‘The Parable of the Vineyard Workers’ test. You know—”What business of yours is my generosity with others; you got the wages you bargained for.”)

In other words, does passing the “more favorable than Ch. 7” test confer immunity on favoritism? As a precedent, I think that is very dangerous. But SCOTUS can’t put in a footnote that says, “This decision shall be non-precedental, except for any other bankruptcy BH Obama really cares a lot about.”

Well, by 4:00 PM Monday, we should know how much is left of the Republic.

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Long126mike on Jun 09, 2009
Do you favor the government’s intervention in GM and Chrysler? I am certainly open to read your thoughts on the topic. That's tough. Macroeconomically, I think it's prudent to keep them both from liquidating simultaneously. Any rational cost-benefit analysis will tell you that it's a prudent choice, because the probability of a downside and the costs of a downside are pretty severe. Do I like guys like Maximum Bob taking his and her private jets to Bali to drink smoothies on the beach, while I pick up the tab for his awful mess? Hell no. I don't like it one bit. If I ran the world, he'd be lucky that the least I did was seize everything he owns and put him in a work camp shoveling cow dung for the next 5 years. Do I love unions, particularly the UAW? Hell no as well. People on the right love to lump unions into the "lefty" side of things, but the reality is that unions are like any interest group of any size and power - they have their own unique agenda. For example, you can find unions in favor of drilling in Alaska, or in favor of publicly-funded sports stadiums. You also find them fighting certain transit innovations or changes in educational policy. But I support the president's decision on this matter at this point because I know for a fact that they're looking at this thing from the big picture perspective, and since it's his job to look out for the country and the economy as a whole, I agree that the choices he's making at the moment are the best choices available from a set of bad options. What can he do? He inherited a lot of big messes at once. I think that people who focus on "getting their money back" or using GM or Chrysler's eventual business success or failure as a metric are missing a large part of the picture. Government accounts for about 20% of the economy in an average year, and its job is to be a stabilizing actor whenever things get out of whack. So if there's a steep drop-off in one aspect of GDP (like consumer spending), then government needs to step up and fill that gap, otherwise the economy is really going to crater. People need to not look at the gross dollar amounts but when they're being spent and for what broad purpose. Take the stimulus bill as another example. There's a big focus on "shovel-ready" projects, which applies to the transportation sector. In an ideal world, I would like that the government shift its funding priorities away from the overwhelming dominance of personal automobiles in terms of person-miles traveled. But that's not what's happening in the short-term stimulus. Most of the money is going to repairing old roads and bridges and building new ones, because they're ready to go and all they need is funds. That helps the economy as a whole at a crucial time, and I accept that trade-off, even though it makes the auto dependence problem worse in the short-term. Is that a sufficient answer? How about you on the broader considerations?

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Mimizhusband on Jun 10, 2009

Long126mike: I would have let Chrysler die in 1979, since I think that bailout sewed the current seeds of destruction. I am very eager to see what Penske can do with Saturn. I currently drive Toyotas but I am open to an quality product. I just will have to have a lot more grey hair before I return to GM. I absolutely loved this comment: If I ran the world, he’d be lucky that the least I did was seize everything he owns and put him in a work camp shoveling cow dung for the next 5 years. Thanks

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MaintenanceCosts The sweet spot of this generation isn't made anymore: the SRT 392. The Scat Pack is more or less filling the same space but it lacks a lot of the goodies, including SRT suspension, brakes, and seats. The Hellcat is too much and isn't available with a manual anymore.
Arthur Dailey I am normally a fan of Exner's designs but by this time the front end on the Stutz like most of the rest of the vehicle is a laughable monstrosity of gauche. The interior finishes suit the rest of the vehicle. Corey please put this series out of its misery. This is one vehicle manufacturer best left on the scrap heap of history.
Art Vandelay I always thought what my Challenger really needed was a convertible top to make it heavier and make visability worse.
Dlc65688410 Please stop, we can't take anymore of this. Think about doing something on the Spanish Pegaso.
MaintenanceCosts A few bits of context largely missing from this article:(1) For complicated historical reasons, the feds already end up paying much of the cost of buying new transit buses of all types. It is easier legally and politically to put capital funds than operating funds into the federal budget, so the model that has developed in most US agencies is that operational costs are raised from a combination of local taxes and fares while the feds pick up much of the agencies' capital needs. So this is not really new spending but a new direction for spending that's been going on for a long time.(2) Current electric buses are range-challenged. Depending on type of service they can realistically do 100-150 miles on a charge. That's just fine for commuter service where the buses typically do one or two trips in the morning, park through the midday, and do one or two trips in the evening. It doesn't work well for all-day service. Instead of having one bus that can stay out from early in the morning until late at night (with a driver change or two) you need to bring the bus back to the garage once or twice during the day. That means you need quite a few more buses and also increases operating costs. Many agencies are saying for political reasons that they are going to go electric in this replacement cycle but the more realistic outcome is that half the buses can go electric while the other half need one more replacement cycle for battery density to improve. Once the buses can go 300 miles in all weather they will be fine for the vast majority of service.(3) With all that said, the transition to electric will be very good. Moving from straight diesel to hybrid already cut down substantially on emissions, but even reduced diesel emissions cause real public health damage in city settings. Transitioning both these buses and much of the urban truck fleet to electric will have measurable and meaningful impacts on public health.