Corinne Ball, head of Jones Day's bankruptcy group and lead counsel to Chrysler, had a piece in the New York Times Dealbook section recently. It is an interesting read. One section I noticed:
Of course, one can criticize the lender and purchaser choices, particularly when the lender is the Treasury. Nevertheless, one must consider the factors potentially motivating the policy choices made at the Treasury. The cost of loans to New Chrysler and the debtor-in possession (DIP) financing for the Chrysler bankruptcy were likely weighed against the liquidation alternative, which would have meant dipping into federal and state coffers to pay for unemployment benefits, the 85 percent credit for medical benefits (for life in the case of bankruptcy), the rescue of pensions underfunded by billions of dollars and other costs.In other words, the sale had its problems, but the alternatives might have been worse and more expensive.
Corinne also addresses a point I have made here repeatedly. The Chrysler sale might have been flawed on numerous policy grounds, but it almost certainly was legal:
The transaction fully complied with existing bankruptcy precedent, which under the extreme facts and circumstances confronting Chrysler permitted a sale some 30 days after filing for bankruptcy relief. The linchpin for this conclusion was that there was no alternative but liquidation, and all the evidence confirmed that liquidation would yield far less than this sale. Could the taxpayers have paid more? No doubt, but that is a question of policy, not bankruptcy law.
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