The Work

February 5, 2009 6:57 PM

Report: Cadwalader, Sonnenschein Tapped to Advise Feds on Auto Bailout

Posted by Brian Baxter

Bloomberg reports that Cadwalader, Wickersham & Taft and Sonnenschein Nath & Rosenthal are advising the U.S. government on how best to handle reorganization plans for Chrysler and General Motors.

Both firms had been retained by the Treasury Department for government contracts work, but news came late Thursday that the two also have been evaluating restructuring scenarios should either Chrysler or GM crumble. (For the moment, Ford is believed to have enough cash reserves to make it through the crisis.)

The work is a boon to Cadwalader, which has rebounded nicely after losing former financial restructuring group cochair Bruce Zirinsky last month to Greenberg Traurig. Cadwalader joined Skadden, Arps, Slate, Meagher & Flom as bankruptcy counsel to the U.S. unit of international chemical giant LyondellBasell earlier this year.

Cadwalader financial restructuring cochairs Deryck Palmer and John Rapisardi are advising the federal government on its auto options, Bloomberg reports. Sonnenschein capital markets partners Robert McCarthy, Jeffrey Murphy, and Erik Klingenberg also are advising on the matter. All three joined the firm in late December when Sonnenschein absorbed the bulk of their former firm, Thacher Proffitt & Wood.

Bloomberg reports that a key question is whether or not the federal government would be first in line to be repaid for the $17.4 billion in loans it has meted out to Chrysler and GM. Other lenders include Citigroup and JPMorgan Chase, Bloomberg reports.

The two automakers have a February 17 deadline to present a progress report to Congress detailing their reorganization plans. Bloomberg reports that if the companies cannot show by March 31 that they have a viable plan for repaying the $17.4 billion loan, the government can demand its money back.

Chrysler is receiving restructuring advice from Jones Day and GM is being advised by Weil, Gotshal & Manges and Dewey & LeBoeuf.

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