The Footwear Begins to Fall

Chrysler has filed its motion (Docket No. 780) to reject about a quarter of its dealership agreements. And while I don’t want to become as grumpy as this guy, it would be nice if the press could accurately relay the relevant legal rules. For example, the Los Angeles Times (via the AP) reports that dealers "can appeal" Chrysler’s decision. What? Even before the court has heard the motion?

More to the point, does anyone think that an objection to the motion will get the dealers much more than a legal bill? I can think of instances where motions to assume and assign have been rejected by bankruptcy courts, and even those are pretty rare, but I can't think of a single straight rejection motion being denied. And here Fiat has already said it won’t take an assignment of these dealerships – so unless the government wants to get even more ensnared in this case, and I sure hope not, there is really no point in denying the motion.

The L.A. Times story does, however, highlight the collateral damage that will likely result from both Chrysler and GM’s chapter 11 cases. The dealerships in question are often important employers and community members in their towns. While every large chapter 11 case has adverse consequences for the small businesses that rely on the debtor, the effect will be magnified by the sheer size of the automakers.

(The reference in the title confirms that bankruptcy professors are generally as geeky as you always suspected).

Comments

[Lawrence D. Loeb]

Professor:

Stargate!!

Loved the show better than the original movie, when they got into their groove.

Lost something when Richard Dean Anderson left, but it's a shame that they cancelled both SG-1 and SG-Atlantis. Now we have to wait for Stargate Universe (who knows what that will be like).

The two SG-1 movies were decent. Have you seen them?

Thanks,

Larry Loeb

[Pete Egeler]

I don't understand that unless this information was posted early in the week.

Dealers (8) in the Knoxville, TN area got their letters shutting down their dealerships 4-days ago!

Why is Chrysler dropping the ax first, filing a request last?

Pete

[FJP]

I don't imagine that those who object to the rejection motion genuinely expect it to be denied. I also suspect that being a dealer Chrysler is forced to keep against its will would be hellish. However, I can see possibilities for ameliorating some of the effects of the rejection process as outlined in the motion, either by stretching out the timetable, getting some real help on disposing of the inventory or getting administrative claim treatment for some of the shutdown expenses that benefit only Chrysler and not the dealers. All of which requires more research and fleshing out the details to pursue, but no one is currently paying me $600 an hour to do that :-)