The Work

June 10, 2009 6:05 PM

Chrysler Sale Finalized, Issues Remain

Posted by Brian Baxter

Despite the U.S. Supreme Court's refusal to halt Chrysler's bankruptcy sale on Tuesday, The National Law Journal reports that similar challenges might arise later this summer relating to the pending bankruptcy of General Motors.

"We would not rule out going to the Supreme Court again," Barry Bressler, a partner at Philadelphia's Schnader Harrison Segal & Lewis, tells the NLJ. Bressler represents an ad hoc committee of consumer victims in the Chrysler and GM Chapter 11 cases.

The "new Chrysler" that has emerged from the section 363 sale to Fiat, the UAW, and the U.S., Canadian, and Ontario governments will be "free and clear" of all pending and future liability claims against "old" Chrysler, reports the NLJ.

Financial restructuring cochair John Rapisardi led a 15-lawyer team from Cadwalader, Wickersham & Taft advising the Treasury Department's Automobile Task Force on the completion of the sale that took place in the firm's New York office this morning.

Private equity group head R. Ronald Hopkinson, antitrust head Charles "Rick" Rule, tax cochair Linda Swartz, finance partners Julian Chung, Christopher McDermott, and Melissa Hinkle, IP partner Bartholomew Verdirame, corporate special counsel Peter Gyr, employee benefits special counsel Mark Holdsworth, and associates James Langston, Jonathan Michael Karas, Douglas Mintz, Karen Walny, and Ngoc Pham Hulbig rounded out the Cadwalader transaction team.

A potential GM section 363 sale might not easily avoid claims and interests by interested parties.

"In GM, there is no third-party buyer," Bressler tells the NLJ. "Hopefully, that means there's a stronger case for tort claimants as a whole. We have product liability [and] personal injury claimants, asbestos claimants, and environmental claimants as well as the future claims issue."

The NLJ reports that five consumer groups have sent a letter to President Barack Obama warning that public safety is being compromised by the expedited bankruptcy proceedings in the Chrysler and GM cases.

With auto companies required by law to share information on death, injury, and property damage with the government, Bressler and others argue that restricting consumers from filing product liability claims against GM and Chrysler will remove their "financial incentive" to fix defects and warn the public.

The NLJ reports that the groups urged Obama to close "this ticking-time-bomb bankruptcy loophole."

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