There are two other blogs that I've reviewed that have commented on SCOTUS's decision on Chrysler, The Bankruptcy Litigation Blog and Natural Born Citizen. Both are written by attorneys, each of whom has a stake in either, or both, of GM and Chrysler. They have, therefore, unsurprisingly cut back on posting to their blogs.
Given all the speeches, articles, and thought advanced about the significance and game-changing nature of the Chrysler [case], it's amazing how two simple sentences from the highest court in the land can turn the bankruptcy world on its head.Leo Donofrio's post, on the other hand, concluded that SCOTUS determined the 2nd Circuit opinion moot because Judge Gonzalez did not issue the stay for the 2nd Circuit hearing - it was issued by the 2nd Circuit. Since Judge Gonzalez ruled on the sale and didn't issue a stay; and since there were no issues relative to Section 363(m), any decision by the 2nd Circuit was moot in any event. Specifically, he states:
After proper briefing on the issue and time to study the law, SCOTUS correctly determined that in order for an appeal such as this to not be moot under 363(m) – absent a bad faith purchaser – the court issuing authorization for the sale would have been required to also stay their own sale authorization at the time such authorization was issued, which did not happen here. Judge Gonzalez did not order the sale stayed pending appeal on June 1st.Mr. Donofrio's analysis is interesting, but I think it's a poor (if not slanted) reading of the law. Section 363(m) states:
The reversal or modification on appeal of an authorization under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and such sale or lease were stayed pending appeal.
57. As provided by Bankruptcy Rules 6004(h) and 6006(d), this Sale Order shall not be stayed for ten days after its entry and shall be effective as of 12:00 noon, Eastern Time, on Friday June 5, 2009, and the Debtors and the Purchaser are authorized to close the Sale Transaction on or after 12:00 noon, Eastern Time, on Friday June 5, 2009.4 Any party objecting to this Sale Order must exercise due diligence in filing an appeal and pursuing a stay or risk its appeal being foreclosed as moot in the event Purchaser and the Debtors elect to close prior to this Sale Order becoming a Final Order.In addition, on June 2, 2009, Judge Gonzalez issued an "Order Certifying Sale Order for Immediate Appeal to United States Court of Appeals, Pursuant to 28 U.S.C. § 158(d)(2)" (Docket 3237) which approved the appeal. Since the stay was already in place under the Sale Order, there was no need to extend it.