Eastman Kodak Company’s bankruptcy is another in a string of recent chapter 11 filings by established brand names that lack a clear exit strategy (others are Borders, Hostess, AMR … Europe!). So much for the "end of bankruptcy"!
As noted in Matt Daneman’s article this week in the Rochester Democrat
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West Legal Education Center, in conjunction with Buyouts Magazine, peHub, Venture Capital Journal, Thomson Reuters West, and DailyDAC, deliver a webinar trilogy — The Restructuring, Insolvency & Distressed Investing For 2012 — featuring some of this country’s finest restructuring professionals (including my partner Jonathan Friedland, who was instrumental in
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As noted in Steve Mufson’s excellent summary in today’s Washington Post (made all the more excellent by having quoted me!), the iconic Hostess Brands fell into bankruptcy yesterday. As with every bankruptcy case, the best summary is found in the "first day affidavit" of the company’s leading executive, in this case Brian Driscoll, Hostess’
Planet Money’s Zoe Chace today aired an excellent story on retail "going out of business" sales. This 6 minute piece is a whirlwind glimpse into these sales from the perspective of the liquidator, the retailer and its staff, the consumer, and the bankruptcy lawyer (me).
Thanks to Planet Money, who last interviewed me back in
There’s an online subscription site, THE DAILY DAC, that is quickly gaining traction among bankruptcy and distressed M&A professionals by carving out for itself a niche in the underserved distressed M&A market for smaller acquisitions. With smaller UCC foreclosure, receivership, creditor assignee, and bankruptcy 363 sales often closing within two weeks to two months from announcement, timely access to
[4/13/10 Update: In this decision, the District Court denied my appeal as statutorily and equitably moot and so would not consider whether Section 363(f) allows bankruptcy sales "free and clear" in in personam products liability claims.]
[12/14/09 Update: Here’s the response briefs of GM and Treasury. Here’s my reply brief. Here’s a link to my post today on Supreme Court’s bombshell ruling vacating the 2d Circuit’s Chrysler decision.]
What started out a couple months ago as a "Slow Boat to China," today feels more like the "Voyage of the Damned."
Yesterday I filed this "Opening Brief" (plus the Sale Opinion at Appendix A and the Sale Order and MPA at Appendix B) on behalf of my five clients in our appeal of the GM Sale Order: Callan Campbell, et al., v. Motors Liquidation Company, Case No. 09-6818 (NRB) (S.D.N.Y.). The brief’s "Summary of the Argument" is at the end of this post.
This appeal is the only one pending that challenges the abhorrent treatment of preexisting products liability claims in either the GM or Chrysler bankruptcy cases.
When I first got involved in the case three months ago, I summarized here the injuries and the myriad adversities faced by my clients on a daily basis. I wrote:
The sad, and all too tragic, stories of my clients, taken from the filed objection, are set forth below. The only thing my clients did wrong here was buy a GM car. For this act of brand loyalty, they have paid dearly. It’s not enough that people lose their lives and get severely injured from design defects and product flaws, now they and their loved ones get thrown under the bus!
Having now lived with GM for about 450 hours the past three months, I have to say I’m thoroughly appalled at the cold-hearted stinginess of those calling the shots at GM and Chrysler. They have left helpless accident victims hanging out to dry for reasons I cannot fathom, while otherwise spending "whatever it takes" — to whomever it takes — "to get the ‘deal’ done." (See Opening Brief, at p.7).
With the US Treasury paying a mind-boggling $92 billion for most of "Old GM" (see Opening Brief, at p.7 fn.4), would it really be such a burden for the Secretary and his Boss to set aside another $250 million or so (or about 1/4% of the total consideration paid in the deal) to make sure there’s a small, but adequate, reserve to cover medical bills, assisted care, and other basic requirements of those (see, e.g., here, here, and Callan Campbell here) severely injured by the design defects built into cars manufactured by the same plants they’re now the stewards of? (See Opening Brief at p.8 fn.6, estimating total remaining products claims left behind at $233.2 million).
Put another way, imagine you’ve got $92.00 in quarters in a big bucket. Now imagine that you can dramatically change for the better the lives of hundreds, maybe even thousands, of people your own mirror-image predecessor destroyed through no fault of their own. And imagine further that all you have to do to achieve that wonderful act of kind-heartedness is to take just one of those 368 quarters and put it aside for the benefit of those whose lives have been damned as a result of mistakes made by some of the people and property you just bought — and now control — for those 368 quarters.
That’s all that needs to be done in GM to make things right, and my guess is that only about a dime needs to be put aside to cover the outstanding products liability claims left to rot in Chrysler. But no one seems to have the political or moral compunction to wrestle those thirty-five cents from the Boss’s own clenched fist.
"Sad" and "pathetic" are the first words that come to mind as I ponder the fact that I’m not on the "Slow Boat to China," but on the "Voyage of the Damned" (Art Spiegelman’s take on it).
My brief’s "Summary of the Argument" is below:
© Steve Jakubowski 2009
Most bloggers report on events; few jump in them. While I lost, I’m not done yet. Here’s my statement of issues on appeal. Here’s Old GM’s counter-designation, filed yesterday.
My Chrysler and GM posts over the last three months generated incredible traffic (around 100,000 page views since May 1 from about 50,000 unique
Three weeks ago, as I discussed here, I jumped into the GM fray and filed this objection on behalf 5 product liability claimants who, absent the "free and clear" sale protections sought by GM under Section 363, would have had the right to add the Purchaser as an additional defendant to their pending lawsuits based
[7/6/09 Update: The Bankruptcy Court entered this opinion and order approving the sale late last night. I filed this notice of appeal.] [7/8/09 Update: Here’s my post on boarding the “slow boat to China” after my motion for direct appeal to the 2d Cir. was denied.]
In today’s depressed environment, Howard Beale’s famous rant in Network–the 1976 movie that took several academy awards against stiff competition (Rocky, All the President’s Men, and Taxi Driver)–sure reads like something that could have been written today:
I don’t have to tell you things are bad. Everybody knows things are bad. It’s a depression. Everybody’s out of work or scared of losing their job. The dollar buys a nickel’s worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there’s nobody anywhere who seems to know what to do, and there’s no end to it.
We know the air is unfit to breathe and our food is unfit to eat. And we sit watching our TVs while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that’s the way it’s supposed to be!
We all know things are bad — worse than bad — they’re crazy.
It’s like everything everywhere is going crazy, so we don’t go out any more. We sit in the house, and slowly the world we’re living in is getting smaller, and all we say is, “Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials, and I won’t say anything. Just leave us alone.”
Well, I’m not going to leave you alone.
I want you to get mad!
I don’t want you to protest. I don’t want you to riot. I don’t want you to write to your Congressman, because I wouldn’t know what to tell you to write. I don’t know what to do about the depression and the inflation and the Russians and the crime in the street.
All I know is that first, you’ve got to get mad.
You’ve gotta say,
“I’M A HUMAN BEING, GODDAMIT! MY LIFE HAS VALUE!“
So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out and yell,
“I’m as mad as hell, and I’m not going to take this anymore!!”
Well, Howard’s rant is what a lot of panicked plaintiffs’ lawyers involved in cases against GM are screaming these days as they watch years of toil on behalf of people seriously injured by defective GM products (like crushed roofs, exploding “side saddle” gas tanks, and collapsing seat backs) potentially go for naught as GM makes its grandest attempt ever to crush an entire class of former customers (presumably including anybody who buys a GM car between now and the closing date of the sale) and existing and future products liability claimants (including those who haven’t even been injured yet!) in a sale that many plaintiffs lawyers of record only received written notice of in the past couple of days.
Those following this blog know my rising concern (even anger) over how products liability claimants were completely stiffed in Chrysler, so much so that Howard’s famous rant came to mind!
So, I decided to do something about it, and officially stepped into the fray by filing this Objection to the GM Sale and this Memorandum in Support. On the brief with me is Public Citizen’s Adina Rosenbaum and Allison Zieve, counsel for the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates, and Public Citizen.
We should win; whether we do is a “horse of a different color.”
***
Many thanks to the Center for Auto Safety’s Executive Director, Clarence Ditlow, for his help in organizing the team, Public Citizen’s Adina Rosenbaum and Allison Zieve for their tremendous assistance in framing the legal arguments and drafting the pleadings, and to Public Citizen’s Director, Brian Wolfman, for his support.
And, of course, special thanks to The Coleman Law Firm’s own Bob Coleman for his generosity in dedicating the firm’s resources to this important pro bono effort.
The sad, and all too tragic, stories of my clients, taken from the filed objection, are set forth below. The only thing my clients did wrong here was buy a GM car.
For this act of brand loyalty, they have paid dearly. It’s not enough that people lose their lives and get severely injured from design defects and product flaws, now they and their loved ones get thrown under the bus!
If their stories don’t bring a tear to your eye, then you probably support the sale’s treatment of product liability claimants too!Continue Reading Objecting to the GM 363 Sale’s Treatment of Product Liability Claims: Stepping Into The Fray
[6/9/09 PM Update: The United States Supreme Court just cleared the Chrysler sale! "The applications for stay … are denied," the Court wrote in this 2 page per curiam opinion. The Court still may hear the petition, but the petitioners needed to prove likelihood of success not just on the merits, but also "a likelihood that irreparable harm will result from the denial of a stay." Even the tort claimants can’t prove that as they’ll always have their day in court in their respective jurisdictions.]
[See Part I of my analysis of Judge Gonzalez’s sale opinion here.]
The brilliant lawyer, author, and ex-blogger, Bill Patry (now senior copyright counsel at Google), wrote on his Patry Copyright Blog back in 2005 about the greatest Biblical scholar of all time, Rabbi Shlomo Yitzhak (whom everyone affectionately calls "Rashi"). Bill wrote:
Rashi is used as a learning device for children not because he is simple (he isn’t) but because of the unusual nature of his commentary. His commentary consists of very terse conclusions, but without the questions that prompted the conclusions. Children are left with the task of asking "What’s Bothering Rashi?" … The "What’s Bothering Rashi?" approach to learning text is useful in analyzing statutes because it teaches one to ask the why of things, rather than as we almost always do, just read the literal words divorced from what the law would be like in their absence.
Bill’s post came to mind in thinking about "What’s Bothering Ruthie?" that would prompt her to write a one-liner calling a halt to a sale that remarkably worked its way from bankruptcy filing to cert. review in less time than it takes the average person to buy a used Town & Country. Here are a few ideas:
I’m guessing, though, that what bothers her most — and frankly what’s really been bothering me most (hence Part II) — is the sale’s treatment of tort claimants, both present and future, and Judge Gonzalez’s cursory justification for such treatment. He wrote:Continue Reading What’s Bothering Ruthie? Chrysler Bankruptcy Sale Opinion Analysis – Part II