And So It Begins
So what may be the most important Chapter 11 proceeding in modern history has begun -- important not just because it is large, but because the court in a sense is being asked to validate or invalidate the unprecedented power grab by the Obama administration. The results of this trial may well slow or accelerate America's devolution into a European-style corporate state where political pull rather than costs or products determine corporate success. It also will have a lot to say as to whether the rule of law has any meaning any more, at least as far as President's go.
The first salvo, by the non-TARP secured creditors that Obama was unsuccessful in beating down, has been fired:
Just hitting the Chrysler bankruptcy docket is an objection filed by W&C on behalf of its clients, objecting to the 363 asset sale. The filing is attached below (and linked here). Some very harsh language with regards to Uncle Sam in there...
The summary of the grounds for the objection:
1. The Proposed Sale Constitutes an Illegal Sub Rosa Plan that Redistributes Value Among Creditor Classes.
2. The Proposed Sale Fails the Requirement of Section 363(f).
3. The Sale Is Not Proposed In Good Faith.
4. The Taking of Collateral through a Direct or Indirect Use of TARP Authority is Unconstitutional. (This one is Huge as it sets a case law precedent.)
Over the weekend, there was a lot of back and forth with W&C (White & Case) senior attorney Tom Lauria, who said that one of his clients gave in to the restructuring when threatened by the Obama administration with having its reputation destroyed by the White House press office. Both the White House press office and the client in question denied this account of events, but never-the-less Obama was indeed vilifying the holdouts, though in a general rather than specific way.
This is probably only the tip of the iceberg. I think if creditors start to see that the bankruptcy judge is unwilling to automatically roll over for the administration, more such revelations will emerge. The blog Finem Respice has a doozy, though it is unsourced and so must be treated with caution.
josh:
Watching the example being made of these bondholders - in the future, who, in their right mind, would ever lend money to a business with a large unionized workforce? Oh yeah - that's right, the government run banks... Silly me.
May 4, 2009, 11:35 amstan:
Is the application of the rule of law considered a "civil liberty" by the ACLU crowd? Unlikely, but this case is more important than most of those that get that crowd pumped up.
May 4, 2009, 11:45 amAA:
This case truly does have it all, issues of due process, absolute priority, hell even the takings clause, with Obama, the Treasury and the UAW in one corner, reluctantly joined by the TARP-lenders. And in the other corner, the non-TARP lenders, and the shape of bankruptcy law, if not the TARP, to come. This will be entertaining to say the least.
May 4, 2009, 1:47 pmA.N.Onymous:
AAARRRRGGGG! I! HATE! APOSTROPHIZED! PLURAL'S!
**** "as far as President’s go" **** should be "as far as Presidents go".
May 4, 2009, 3:17 pmLoneSnark:
Can we have a new word? Fascism is too historically wrecked to be used to effect in modern discourse. As such, we need a new word for fascism, which meams simply fascism without the jewish murder.
May 4, 2009, 6:44 pmDKN:
LoneSnark,
"Can we have a new word?"
"Obamunism" has been going the rounds.
May 5, 2009, 8:50 ammarkm:
Lonesnark: "Fascism" proper (Mussolini's version) was without the Jewish murder, as long as Mussolini was really in charge. And the third European fascist state - Franco's Spain - actually took in and saved some Jews during WWII. Murdering potential enemies is a characteristic of fascism; spending so much energy murdering non-enemies simply shows up one of the defects of fascist systems, their vulnerability to the mental quirks of a single man.
May 5, 2009, 5:35 pm