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May 1, 2009 1:56 PM

Shearman, Cleary, Cadwalader Advising on Latest Chrysler Machinations

Posted by Brian Baxter

Before Chrysler drove itself into bankruptcy on Thursday, the company's private equity parent, Cerberus Capital Management, first needed to take full control of Chrysler.

On Monday, Germany's Daimler agreed to pay $600 million into Chrysler's pension plan over the next three years in order to free itself from liabilities stemming from the company's disastrous $36 billion merger with Chrysler in 1998. It's not the first time Daimler is paying Cerberus to take Chrysler's liabilities off its hands.

Daimler's sale of an 80.1 percent stake in Chrysler to Cerberus for $7.4 billion in 2007 was one in name only. The Stuttgart-based carmaker actually paid Cerberus $650 million to take on the bulk of Chrysler's liabilities, with the New York-based private equity firm investing roughly $6 billion into Chrysler and it's financial unit. While Daimler received an additional $1.5 billion from Cerberus, it also needed to invest another $2 billion in Chrysler itself.

Earlier this week, Daimler again paid Cerberus, this time to take its remaining 19.9 stake in the embattled Auburn Hills, Mich.-based automaker. Shearman & Sterling advised Daimler, a longtime client of the firm, on the cession.

M&A partners W. Jeffrey Lawrence and Markus Rieder, employee benefits partner Kenneth Laverriere, IP partner Samuel Waxman, litigation partner Alan Goudiss, tax partner Peter Blessing, M&A counsel Heiko Schiwek, employee benefits counsel Patricia Kuhn, tax counsel Ansgar Simon, and associates Adam Samarillo, Stefan Falge, Elizabeth Roseman, Erin Efland, Paula Howell, and Mallory Tosch advised Daimler.

The deal gives Cerberus complete ownership of Chrysler--at least for the time being--and effectively ends Daimler's Chrysler nightmare.

Well, almost.

Shearman will continue to advise Daimler in connection with Chrysler's bankruptcy proceedings. Bankruptcy and restructuring partner James Garrity, Jr., a former bankruptcy judge in the Southern District of New York, is leading a Shearman team advising the automaker. Garrity will be assisted by bankruptcy and reorganization counsel Susan Fennessey and associates Curt Goldman, Erin Ferrell, Curtis Scribner, and Kerri Silver.

We can't promise that we can stay on top of all the lawyers landing on the Chrysler bankruptcy docket, which seems to be expanding exponentially by the hour. But we'll try. To that end, here are the lawyers at Cadwalader, Wickersham & Taft team advising the U.S. Treasury Department as outside counsel to the Obama administration's auto industry task force:

Financial Restructuring: practice cochair John Rapisardi and associates W. Josh Brant and Douglas Mintz.

Corporate: private equity chair R. Ronald Hopkinson.

Finance: partner Julian Chung.

Bankruptcy Litigation: special counsel Peter Friedman.

Cleary Gottlieb Steen & Hamilton, as we reported earlier this week, is advising the United Auto Workers on an agreement that could see the union take a 55 percent take in any "new" Chrysler entity that emerges from bankruptcy. The firm's team includes:

Corporate: partners Richard Lincer and David Gottlieb and associates Jonathan Balcom, Lauren Hakala, John Delaney, and Lua Yuille.

Employee Benefits: partner A. Richard "Brick" Susko and associates Catharine Slack and Michael Albano.

Bankruptcy: partner James Bromley and associate James Croft.

Tax: partner Jason Factor and associates Mirna Zwitter-Tehovnik and Corey Goodman.

Antitrust: partners Mark Nelson and James Modrall, counsel Steven Kaiser, and associates Thomas McConnell and Armin Steinbach.

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