Wednesday, May 20, 2009

363(b) Motion Unopposed? Perhaps Not! Part 2 - Epiq Can't Keep Up the PACE(r)

Turns out that my earlier post left out some of the motions that were filed yesterday, and these were some very interesting motions indeed. Unfortunately, I only have access to the Chrysler docket through the website operated for Chrysler by Epiq - and Epiq, perhaps overwhelmed by the incredible volume of filings, didn't post all of the filings from yesterday by early this morning when I wrote that post.

Not only did the Indiana Pensioners file objections to the 363(b) sale, but they also made motions to move their dispute to the Federal District Court (and out of the Bankruptcy Court) and asked Judge Gonzalez to stay the May 27th hearing on the 363(b) sale pending the outcome of the District Court's proceedings. In addition, they moved for the appointment of a Trustee and an Examiner!

Judge Gonzalez rejected the petition for a stay by the Indiana Pensioners, noting that they had already filed an objection and that it was unclear that they would win at the District level (Docket 1343).

If I understand correctly, the argument being put forth to move the case to District Court is that the Treasury Department acted outside of its authority (beyond what had been passed by Congress in the various bills passed to deal with the economic crisis). Specifically, I believe that the argument is that the Treasury Department negotiated on behalf of Chrysler, using their TARP and regulatory influence to force an outcome that provides less for the first lien creditors than they would have otherwise received without Treasury interference.

I'll have to read these documents in greater detail to be sure (and please let me know if you have a different interpretation).

The Indiana Pensioner's motions have a number of useful Exhibits, so you should go to the Docket to see them (but I will provide the link for Docket 1258 Exhibit D which is the transcript of the May 4th hearing). The relevant Docket numbers are: 1256, 1257, 1258, 1259 (correcting their objection to the 363(b) sale), and 1268. Docket 1277 was the notice of the hearing TODAY of for the stay of the May 27th sale hearing.

I am not an attorney, so I'm not certain whether Jones Day will be filing a response to any of the objections. It will certainly be an interesting case to watch.

By the way (per Docket 1308), the Indiana Pensioners that White & Case are representing hold a $42,502,733 principal position in the first lien loan (totaling $6.9 billion). While that is a fairly large amount of money, it represents only 0.62% of the total loan.

I would expect Jones Day to argue that neither the Dealers nor the Indiana Pensioners have standing to object to the 363(b) sale. I don't know how Judge Gonzalez would rule on that.

We now also need to watch the District Court to see what happens with the case there.

We'll keep watching.

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