« Lubben Is Around to Stay | Main | California and the Argentine Option »

42 Days and Out

posted by Stephen Lubben

The Chrysler sale has closed.

Now the rejected dealers, underpaid secured lenders, and other unsecured creditors can file their proofs of claim and wait to see if there is anything left in "old Chrysler" to make any sort of a distribution.  If there is not some hope of value in the near term, we may be looking at a conversion to chapter 7.

My own research shows that liquidation in chapter 11 is highly preferable for the unsecured creditors, as the mean and median distribution in chapter 7 is 0%.  Of course, that option is only available if there are funds to pay for it -- Jones Day is not going to work for free.


Neither will Capstone or the i-bankers.

Given that the $2 billion Fiat Alliance payment only covers about 1/3 of the secured creditors' claims and that the deal took away most of the assets, is there any hope for the unsecured creditors even in Chapter 11?

It depends on where the value is -- the remaining plants are probably subject to the creditors liens. There may be other assets that are not subject to the liens. To the extent the lenders have a deficiency claim, they are simple unsecured creditors along with the rejected dealers, etc. As indicated in the post, I would not be surprised if this ended up in chapter 7 -- perhaps in a few weeks, once the professionals get a handle on "what there is."

The comments to this entry are closed.


Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed



  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.