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First Supplemental Objection of the Chrysler NonTARP Lenders - 5/5/09

First Supplemental Objection of the Chrysler NonTARP Lenders - 5/5/09

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Published by Wall Street Folly
First Supplemental Objection of the Chrysler Non-TARP Lenders to the Debtors Motion for an Order (A) Approving Bidding Procedures and Bidder Protections for the Sale of Substantially All of the Debtors Assets and (B) Scheduling a Final Sale Hearing and Approving the Form and Manner of Notice Thereof (related document(s)[190]) filed by Gerard Uzzi on behalf of Chrysler Non-TARP Lenders. (Uzzi, Gerard)
5/5/09
First Supplemental Objection of the Chrysler Non-TARP Lenders to the Debtors Motion for an Order (A) Approving Bidding Procedures and Bidder Protections for the Sale of Substantially All of the Debtors Assets and (B) Scheduling a Final Sale Hearing and Approving the Form and Manner of Notice Thereof (related document(s)[190]) filed by Gerard Uzzi on behalf of Chrysler Non-TARP Lenders. (Uzzi, Gerard)
5/5/09

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Published by: Wall Street Folly on May 05, 2009
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05/11/2014

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Hearing Date and Time: May 5, 2009 at 3:30 p.m., ET
LOSANGELES 819641 (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. ))
FIRST SUPPLEMENTAL OBJECTION OF THE CHRYSLER NON-TARP LENDERSTO THE DEBTORS’ MOTION FOR AN ORDER (A) APPROVING BIDDINGPROCEDURES AND BIDDER PROTECTIONS FOR THE SALE OF SUBSTANTIALLYALL OF THE DEBTORS’ ASSETS AND (B) SCHEDULING A FINAL SALE HEARINGAND APPROVING THE FORM AND MANNER OF NOTICE THEREOF
TO THE HONORABLE ARTHUR J. GONZALEZ,UNITED STATES BANKRUPTCY JUDGE:The Chrysler Non-TARP Lenders,
1
by and through their undersigned counsel,hereby file this first supplemental objection (the “Objection”) to the first order requested by theDebtors’ Motion for An Order (A) Approving Bidding Procedures and Bidder Protections for the
1
The Chrysler Non-TARP Lenders are comprised of certain holders, or investment advisors to holders, of the Senior Debt (as defined below).
 
 
LOSANGELES 819641 (2K)
2Sale of Substantially All of the Debtors’ Operating Assets (B) Scheduling a Final Sale Hearingand (C) Approving the Form and Manner of Notice Thereof [Docket No. 190] (the “SaleMotion”) filed by Chrysler, LLC (“Chrysler”) and the above-captioned debtors and debtors inpossession (collectively, the “Debtors”).
2
In support of its Objection, the Chrysler Non-TARPLenders respectfully state and represent as follows:
PRELIMINARY STATEMENT
The Sale Motion seeks approval of bidding procedures and a sale schedule(collectively, “Sale Procedures”) that are designed to prevent, not encourage, competitivebidding. Indeed, the Sales Procedures are designed to do nothing more than give the appearanceof legitimacy to a sale that is facially defective and constitutes an illegal
sub rosa
plan. Throughthe Sale Procedures, the Debtors in effect preclude anyone but the government from bidding onthe Debtors’ assets. Accordingly, the Sale Procedures are inherently unfair and do not complywith the fundamental purpose for bidding procedures – to maximize the sale price for theDebtors’ assets.The Sale Procedures provide just over one week for potential bidders to bid onsubstantially all of the Debtors’ assets. To compound this absurdity, the Debtors mandatevirtually every term of a potential bid, with each restriction designed not to generate bids butrather to discourage them. For example, under the Sale Procedures, the Debtors require that thepurchase price and terms as well as the conditions of bids be substantially the same as those setforth in the proposed Purchase Agreement. (Indeed, the Debtors even seek a “redline” of anyproposed agreement reflecting changes against the Purchase Agreement). This assures that the
2
This Objection does not constitute the Chrysler Non-TARP Lenders’ Objection to each of the ordersrequested in the Debtors’ Sale Motion set forth in Docket No. 190, but only an objection to the limited portions of that Sale Motion discussed herein. The Chrysler Non-TARP Lenders intend to file an objection to the Sale Motionin its entirety by the objection deadline.
 
 
LOSANGELES 819641 (2K)
3government’s stalking horse bid will prevail because the proposed sale is structured to achievepolitical, not economic, goals. The Debtors would require bids (amounting in the billions of dollars) to be made without the protection of any due diligence, financing contingencies, or otherbid protections. The Debtors would require bidders to agree to certain collective bargainingagreements, without any showing that such agreements benefit the estates or are critical tomaximizing value for the estates. Finally, in an attempt to impose their
sub rosa
plan and makean end run around the priority scheme of chapter 11, the Debtors intend to require a bidder toassume billions in liabilities held by certain favored unsecured creditors, whether or not doing somaximizes value for the estates. Such a provision serves no purpose other than ensuring that thegovernment is the only bidder and the prearranged government/Chrysler/UAW/Fiat
sub rosa
 plan gets pushed through this Court. Finally, the Sale Procedures do not preserve the section363(k) rights of the Chrysler Non-TARP Lenders.Tellingly, the Sale Procedures provide for broad rights to reject bids uponconsultation with, among others, the U.S. Treasury—one of the sponsors of the Debtors’proposed sale transaction. The Sale Procedures are simply further evidence of the Debtors’, andthe U.S. government’s, attempt to mandate the proposed sale to Fiat, and thereby take away theChrysler Non-TARP Lenders’ property rights without providing them due process of law.The requested order for the proposed Sale Procedures should be denied.
BACKGROUND
3
 
1.
 
On April 30, 2009 (the “Petition Date”), each of the Debtors filed petitionsfor relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), therebycommencing their respective chapter 11 cases (collectively, the “Chapter 11 Cases”). The
3
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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