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Objection to Chrysler Sale Motion

Objection to Chrysler Sale Motion

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Published by DealBook
Non-TARP lenders' objection to Chrysler's motion to approve a sale in bankruptcy court.
Non-TARP lenders' objection to Chrysler's motion to approve a sale in bankruptcy court.

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Published by: DealBook on May 04, 2009
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06/15/2009

 
Hearing Date and Time: May 4, 2009 at 10:00 a.m., ET
LOSANGELES 819558 (2K)
WHITE & CASE LLP1155 Avenue of the AmericasNew York, New York 10036-2787(212) 819-8200Glenn M. KurtzGerard H. UzziWachovia Financial Center, Suite 4900200 South Biscayne Blvd.Miami, Florida 33131(305) 371-2700Thomas E Lauria (
admitted pro hac vice
)ATTORNEYS FOR THE CHRYSLERNON-TARP LENDERS
IN THE UNITED STATES BANKRUPTCY COURTFOR THE SOUTHERN DISTRICT OF NEW YORK
)In re ) Chapter 11)CHRYSLER, LLC, et al., ) Case No. 09-50002) Jointly AdministeredDebtors. ))
PRELIMINARY OBJECTION OF THE CHRYSLER NON-TARP LENDERS TOMOTION OF DEBTORS AND DEBTORS IN POSSESSION, PURSUANT TOSECTIONS 105, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCYRULES 2002, 6004 AND 6006, FOR (I) AN ORDER (A) APPROVING BIDDINGPROCEDURES AND BIDDER PROTECTIONS FOR THE SALE OF SUBSTANTIALLYALL OF THE DEBTORS’ OPERATING ASSETS (B) SCHEDULING A FINAL SALEHEARING AND (C) APPROVING THE FORM AND MANNER OF NOTICETHEREOF; AND (II) AN ORDER (A) AUTHORIZING THE SALE OFSUBSTANTIALLY ALL OF THE DEBTORS’ OPERATING ASSETS, FREE ANDCLEAR OF LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (B)AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAINEXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTIONTHEREWITH AND RELATED PROCEDURESAND (C) GRANTING CERTAIN RELATED RELIEF
 
 
LOSANGELES 819558 (2K)
2TO THE HONORABLE ARTHUR J. GONZALEZ,UNITED STATES BANKRUPTCY JUDGE:The Chrysler Non-TARP Lenders,
1
by and through their undersigned counsel,hereby file this preliminary objection (the “Preliminary Objection”) to the Motion of Debtors andDebtors in Possession, Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code andBankruptcy Rules 2002, 6004 and 6006, for (I) An Order (A) Approving Bidding Procedures andBidder Protections for the Sale of Substantially All of the Debtors’ Operating Assets (B)Scheduling a Final Sale Hearing and (C) Approving the Form and Manner of Notice Thereof;and (II) An Order (A) Authorizing the Sale of Substantially All of the Debtors’ Operating Assets,Free and Clear of Liens, Claims, Interests and Encumbrances, (B) Authorizing the Assumptionand Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewithand Related Procedures and (C) Granting Certain Related Relief [Docket No. 190] (the “SaleMotion”) filed by Chrysler, LLC (“Chrysler”) and the above-captioned debtors and debtors inpossession (collectively, the “Debtors”). In support of its Preliminary Objection, the ChryslerNon-TARP Lenders respectfully state and represent as follows:
PRELIMINARY STATEMENT
On Sunday, May 3, 2009, at approximately 7:30 pm EDT, the Debtors filed theSale Motion. The Sale Motion and the accompanying exhibits and memorandum of law consistof close to 290 pages and seek approval of detailed sales procedures on a little more than 15hours notice. This does not and cannot comply with the basic requirements of due process.Based on the foregoing, the hearing on the sales procedures should be continued for at least twobusiness days to permit the parties in interest to properly evaluate the bidding procedures and
1
The Chrysler Non-TARP Lenders are certain holders, or investment advisors to holders, of the Senior Debt(as defined below).
 
 
LOSANGELES 819558 (2K)
3formulate their responses, if any.Separate and apart from the lack of due process and any infirmities in the biddingprocedures themselves, the Sale Motion should be denied because it seeks approval of a sale thatcannot be approved under the Bankruptcy Code. In short, the Court should not permit a patentlyillegal sales process to go forward. Among other things, the sale proposed by the Debtorsconstitutes an impermissible
sub rosa
plan of reorganization that strips the Chrysler SeniorLenders of the protections of section 1129(a) of title 11 of the United States Code (the“Bankruptcy Code”) and improperly attempts to extinguish their property rights without theirconsent. Further, the sale does not comply with section 363(f) of the Bankruptcy Code and wasnot proposed in good faith. Indeed, the sale is far from an arm’s length transaction, but rather, isthe result of a tainted sales process dominated by the United States government. Under thesecircumstances, the Sale Motion should be denied.
BACKGROUND
2
 
1.
 
On April 30, 2009 (the “Petition Date”), each of the Debtors filed petitionsfor relief under chapter 11 of the Bankruptcy Code, thereby commencing their respective chapter11 cases (collectively, the “Chapter 11 Cases”). The Debtors are operating their business asdebtors and debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.The Chapter 11 Cases are being jointly administered for procedural purposes.2.
 
Chrysler and certain of its affiliates are parties to that certain Amendedand Restated First Lien Credit Agreement, dated as of August 3, 2007 (as may have beenamended or supplemented, the “Senior Credit Agreement”) with JPMorgan Chase Bank N.A., asadministrative agent, and certain lenders party thereto from time to time (the “Senior Lenders”),
2
Certain of the facts set forth herein are based upon the representations of the Debtors in the Sale Motion.The Chrysler Non-TARP Lenders reserve the right to challenge such representations, and nothing herein shallconstitute a waiver of such right.

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