GM, Chrysler, and Future Tort Claims

Steve Jakubowski continues his interesting ruminations over the Chyrlser sale, noting that he doubts that Justice Ginsburg is "losing sleep over whether the sale is a sub rosa plan or whether the absolute priority rule was violated."  I agree, although clearly lots of other chapter 11 professors do not.

Steve goes on to state that the big issue in the appeal is the treatment of tort creditors -- noting that even Credit Slips wild man Professor Lubben agrees with regard to future tort claimants (gasp!).

Well, I do agree that future tort claimants have the strongest argument of all the appellants (and strangely, they are receiving the least press attention), which is why I was very interested to see that there has been a motion to appoint a future asbestos claims representative in GM.

It might well be in GM's interest to agree to this motion, since the presence of such a representative might increase its ability to address these claims in the sale order. On the other hand, there is an argument to be made that the tort plaintiffs might have been better off not filing this motion, since it will make it harder for them to assert successor liability claims against "new GM," an entity that might actually be able to pay such claims.

Comments

[Joe]

Is Richard Epstein a chapter 11 professor?

[Stephen Lubben]

I will concede the point -- many professors who don't understand corporate bankruptcy (as actually practiced) also don't like these two cases.