* August 5, 2009, 3:59 PM ET
Appeals Court Issues Chrysler Sale Opinion
Nearly two months after Chrysler’s controversial bankruptcy sale closed, the 2nd U.S. Circuit Court of Appeals has issued an opinion on its decision to allow the sale to move forward.
In the opinion released Wednesday, the 2nd U.S. Circuit rejected arguments made by a group of Chrysler’s lenders that the auto maker’s sale was an attempt to subvert Chapter 11 rules. The court also said the lenders, a group of Indiana pension funds, didn’t have standing to challenge the U.S. government’s decision to use money from the Troubled Asset Relief Program to fund the sale of Chrysler’s assets.
Judge Dennis Jacobs, the 2nd Circuit’s chief judge, said the sale was the only way for Chrysler to avoid liquidation, which would have meant far lower recoveries for all creditors, including the lenders. In the opinion, Jacobs said Chrysler was rapidly losing value in Chapter 11 and needed to sell its assets quickly to avoid irreparable damage.
“With its revenues sinking, its factories dark, and its massive debts growing, Chrysler fit the paradigm of the melting ice cube,” Jacobs wrote. “Going concern value was being reduced each passing day that it produced no cars, yet was obliged to pay rents, overhead, and salaries.”
There’s a whole lot more – 53 pages to be exact. You can read the full decision here.
http://online.wsj.com/public/resourc...er_opinion.pdf
Article LINK:
Appeals Court Issues Chrysler Sale Opinion - Bankruptcy Beat - WSJ
