The best thing about tight deadlines is the moment they finally come to an end.  My latest race against time was to complete this 50 page outline (including appendices) for a Practicing Law Institute (PLI) presentation, entitled Treatment of IP Licenses in Bankruptcy, that I’m delivering next April 27 in Chicago as part of the Advanced Licensing Agreements 2010 seminar series.  Here’s my introduction to it:

Recent studies report a veritable explosion of intellectual property assets in the past quarter century, with intangible book value as a percentage of market capitalization for the S&P 500 increasing from 1.6% in 1975 to 15.5% in 2005, intangible book value as a percentage of total book value increasing from 1.9% in 1975 to 43.2% in 2005, and intangible market value as a percentage of total market value increasing from 16.8% in 1975 to 79.7% in 2005. Former Fed Chairman, Alan Greenspan, summed up this trend in a speech in 2004 (when his word was still gospel), saying:

In recent decades, the fraction of total output of [the US] economy that is essentially conceptual rather than physical has been rising. The trend has, of necessity, shifted the emphasis in asset valuation from physical property to intellectual property and to the legal rights inherent in intellectual property.

With intellectual property comprising a sizable chunk of reported intangible value, and with vast segments of the world and US economy teetering on the brink of balance sheet or equitable insolvency, it is imperative that IP lawyers understand how bankruptcy law interfaces with intellectual property law for each of the varied types of IP assets and agreements.

This outline provides an overview of key bankruptcy terms of art, like “intellectual property” and “executory contracts.” It then looks at the rights of the debtor/trustee and nondebtor counterparties to IP licenses; first from the perspective of the debtor/trustee as IP licensee, and second, from the perspective of the debtor/trustee as IP licensor. It concludes with a review of various drafting and other strategic considerations that will assist both in upfront structuring of IP licensing transactions and in addressing the rights of the counterparties as the flames of bankruptcy torch the parties’ original understandings and intentions. Appendices at the back provide a handy “issue spotting checklist” and a select bibliography of some of my favorite scholarly works addressing these issues in greater depth.

Before the internet and explosion of online materials on every subject under the sun, there was PLI–a trusted and much appreciated resource to quickly learn about important topics.  It’s a real privilege to have the opportunity to participate in PLI’s Advanced Licensing series, and thanks especially to my fellow Union College grad, Ira Levy of Goodwin Proctor, co-chair of the seminar series for inviting me to participate in this event.

My next two holiday posts will be completely off topic, but certainly appropriate for this time of year when most people’s  thoughts are fixated, one way or another, on lights; simple reminders of Divine miracles, both great and small, and of all we have to be thankful for.

[The inset picture, of course, is Salvadore Dali’s 1931 masterpiece, only 10 x 13 inches in size, entitled “The Persistence of Memory,” which came to mind from my latest race against time.  Apparently, Dali–only 27–conceived it while suffering from a headache and a bout of “painter’s block” after focusing on some Camembert cheese that he had just eaten.  “The gooey softness of the cheese, the intensifying headache and Dalí’s general mindset all fused, and he came up with the concept of ‘soft watches, one of them hanging lamentably.'”  Go figure!]

 

© Steve Jakubowski 2009

 

Hard to ignore today’s bombshell summary disposition by the US Supreme Court today on the Indiana Pension Funds’ appeal of the Second Circuit’s decision in Chrysler (see earlier discussion of case here).  Clearly, however, the Court’s six line summary disposition tossing the 2d Circuit’s decision in Chrysler requires careful thought.  First, here’s what the Supreme Court held:

The petition for a writ of certiorari is granted.  The judgment is vacated, and the case is remanded to the United States Court of Appeals for the Second Circuit with instructions to dismiss the appeal as moot.  See United States v. Munsingwear, Inc., 340 U.S. 36 (1950).

One may be tempted (as this esteemed blogger was) to claim that Chrysler remains persuasive authority, but was simply “vacated on other grounds.”  I don’t think that’s the case here, however.  For starters, the Supreme Court couldn’t have vacated Chrysler on the basis that the matter was moot at the time the case was decided.  After all, the 2d Circuit’s original order of 6/5/09 denying the appeal on the merits wasn’t moot at the time of entry since the effectiveness of the bankruptcy court’s sale order had been stayed by the 2d Circuit itself until it had a chance to rule on the merits.  Additionally, the effectiveness of the 2d Circuit’s judgment itself was stayed by the Supreme Court.  As such, there’s no basis for the Supreme Court now to have vacated Chrysler based on an argument that the matter was moot at the time of the original decision.

Perhaps then, a better reading of today’s mysterious "summary disposition" is that the Court found merit in the petition, and hence granted it, and furthermore didn’t much care for the opinion on substantive grounds, so vacated it.  Having done so, however, the Court had nothing left to decide since the matter truly was moot because the sale had closed and couldn’t be unwound.

One also may be tempted to say that the Court wasn’t tipping its hand in this way, but if not, then why not simply deny the petition as moot, which it clearly is at this point?  Why take the extra, unnecessary step of vacating the judgment and only then dismissing the appeal as moot?  Also, why cite to Munsingwear if the Court didn’t intend to erase the precedential effect of the decision, for there the Court noted:

Our supervisory power over the judgments of the lower federal courts is a broad one.  As already indicated, it is commonly utilized in precisely this situation to prevent a judgment, unreviewable because of mootness, from spawning any legal consequences.  (Citations omitted, emphasis added).

If nothing else, reading the Court’s summary disposition today as a spaying of Chrysler to "prevent a … spawning of any legal consequences" surely neuters any reading of the Court’s 2 page per curiam opinion from last June suggesting there wasn’t a "fair prospect that a majority of the Court will conclude that the decision below was erroneous."

Given all the speeches, articles, and thought advanced about the significance and game-changing nature of Chrysler, it’s amazing how two simple sentences from the highest court in the land can turn the bankruptcy world on its head.

I’d say the slow boat’s finally catching some wind!

[Inset is an artist’s rendition of the USS Constitution (a/k/a "Old Ironside"), the oldest commissioned naval vessel still afloat today.]

[12/15/09 Update:  Be sure to check out Steve Lubben’s Credit Slips post linking to the Alvarez v. Smith case for further insights into the Court’s practice of vacating lower court judgments that, by happenstance, are moot.]

© Steve Jakubowski 2009

[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

 

 

Continue Reading Voyage of the Damned: The GM Tort Claimants’ Opening Appellate Brief — Brother, Can You Spare a Quarter?

One of blogging’s many benefits is in meeting people I would not have otherwise met.  Coming off an extended personal–and blogging–vacation, and with the three-week fall cycle in the Jewish Holidays fast approaching (not to mention my appeal brief in GM due next Wednesday and a chunk of other work), I’m thankful that one of the people I’ve recently met–Yitzhak Greenberg–has offered to author a guest post for the blog.  Yitzhak is associated with the Law Offices of Gabriel Del Virginia in New York City.  His practice is focused on bankruptcy, including the representation of landlords and tenants in bankruptcy.  He previously worked for a prominent New York City bankruptcy boutique and clerked after law school for Bankruptcy Judge Arthur J. Gonzalez, of Chrysler, Enron, and Worldcom fame.  He was selected by Fordham University School of Law, his alma mater, as a Centennial Fellow, where his responsibilities included assisting in the drafting of The Final Report to the Chief Judge of the State of New York: The Commission to Promote Confidence in Judicial Elections (a topic of considerable interest to Retired Justice Sandra Day O’Connor).  He also just authored the lead article for this month’s The Bankruptcy Strategist, “File for Chapter 11, Get the First Month’s Rent Free?”

If anyone knows anything about “stub” rent, it’s Yitzhak, and I thank him for graciously providing us with his thoughtful analysis of this thorny issue of law in this post, which he entitles:

In re Sportsman’s: The Death Knell for Stub Rent?

 

Continue Reading Don’t Flub “Stub” Rent: Some Thoughts on Code Section 365(d)(3) from Yitzhak Greenberg

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 sites), while my involvement in the GM case and appeal of the decision led to several media interviews and appearances, including this 20 minute podcast just posted on the LexisNexis communities / Bankruptcy Law Center webpage.  In it, I discuss the differences between 363 sales and reorganization plans, predictions of the "end of bankruptcy," why I got involved in GM, Judge Gerber’s decision and my appeal, why I started blogging, and the implications of GM and Chrysler for bankruptcies generally and the economy at large.

Thanks to LexisNexis’s Steve Berstler for the interview and to Erin Capellman and her colleagues at LexisNexis for making the podcast happen and for linking to my Chrysler and GM blog posts.  LexisNexis was the pioneer in online legal research and remains the premiere online legal research service.  And for those of you who are involved in litigation, get LexisNexis’ CaseMap and Concordance litigation management software.  We use these products in every litigation matter we’re involved in, and I can’t recommend them strongly enough.

For posterity’s sake, here’s links to some other media interviews and quotes I’ve given in the past month or so.  As for the experience generally, I concur with these two architects of the GM sale, who recently summed up the experience as "entirely gratifying … a ‘once-in-a-lifetime’ experience."

TV/Radio:

Print / Blogs:

The Wall Street Journal    The New  York Times    NYT Dealblog    Bloomberg   

The Washington  Post   AmLaw Daily    National Law Journal    Financial Post

Lawyers USA    AP / Time    ABC    USA Today   Detroit Free Press  

Cleveland’s Plain Dealer    Reuters / Forbes    PR News   

Lexblog’s Real  Lawyers Have Blogs    Tom Lindmark / Seeking Alpha

The Pop Tort    China News    Viet Nam News

Thanks to everyone for reading, listening, or watching, and special thanks to the producers, reporters, and bloggers who made these interviews and appearances possible!

© Steve Jakubowski 2009

With the Second Circuit’s Judge Sotomayor soon to ascend to the Supreme Court, bankruptcy lawyers must be disappointed at the complete absence of any questioning of her on bankruptcy issues.  And it’s not like there’s nothing to talk about!  Only 10 days ago, Judge Gerber felt compelled by the Second Circuit’s Chrysler decision to issue this opinion and order permitting "New GM" to walk away from a few hundred million dollars of product liability claims despite the fact that We, the People (via the US Treasury) were paying $90 billion for a company that had a liquidation value of no greater than about $9 billion (on a good day).  Even putting aside the equities of not assuming a de minimus amount of claims (relatively speaking) of people least able to defend themselves from loss, does she really believe–like her colleagues who decided Chrysler–that Bankruptcy Code section 363 lets a debtor sell its assets "free and clear" of in personam products liability claims that could be asserted against the purchaser under state law theories of successor liability?  And if so, why?  And, furthermore, exactly how was due process advanced when New Chrysler walked away from successor products liability claims of people who haven’t even been injured yet in an accident?  A letter sent by Senators Reid and Durbin late last month gave me hope that we’d hear these questions asked, but it looks like that’s not going to happen.

As for Judge Sotomayor’s bankruptcy jurisprudence, Clean Slate’s Andy Winchell (here and here) and Texas Bankruptcy Lawyer Steve Sather (here and here) were the first (and last) to canvass her opinions involving bankruptcy issues.  All in all, nothing to complain about, and certainly her decision in Official Comm. of Equity Sec. Holders v. Official Comm. of Unsecured Creditors (In re Adelphia Communs. Corp.), 544 F.3d 420 (2d Cir. 2008) (pdf), affirming dismissal of the equity committee’s appeal was a notable one.  There, Bankruptcy Judge Gerber confirmed Adelphia’s chapter 11 plan, which stripped the equity committee of standing previously granted to it to prosecute derivative claims and transferred those claims to a litigation trust established under the plan (the first about $6.5 billion of which would go to unsecured creditors until they were paid in full, leaving equity "hopelessly out of the money").  In affirming Judge Gerber’s confirmation order (but don’t forget to look at Judge Scheindlin’s first crack at the appeal), Judge Sotomayor wrote that a court "may withdraw a committee’s derivative standing and transfer the management of its claims, even in the absence of that committee’s consent, if the court concludes that such a transfer is in the best interests of the bankruptcy estate."  In other words, she wrote, the "Equity Committee’s derivative standing under STN [did not] vest it with ownership over its derivative claims."  Curiously, she never addressed the obvious question of whether the appeal was moot because the plan had been substantially consummated.  So maybe there is hope for those concerned that substantial consummation of a plan or sale moots all appeals (especially–as Steve Sather points out–given her having joined in last year’s Manville decision that was just reversed on procedural grounds, as discussed here, by the Supreme Court in Travelers v. Bailey).

This is long-winded background to what I’ve been wanting to write about for a very long time.  And I figured as long as people are giving Judge Sotomayor tips on how to be a better Judge or Justice, I’d offer a tip of my own:

READ THESE BOOKS!

Continue Reading Required Bankruptcy Reading from Klee and Hayes for Justice-To-Be Sonia Sotomayor (and You Too!)

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 on each of their respective state’s successor liability laws.

After putting in 20+ hour days for a full week, including reviewing 35+ Gigabytes of OCR’d documents from GM, deposing Fritz Henderson and the Auto Task Force’s Harry Wilson over two days, attending three days of hearing, and giving everything I had in this closing argument, Judge Gerber’s opinion approving the sale and his bench decision denying my motion for direct appeal to the Second Circuit ended the fray for me and put my clients’ appeal on the "slow boat to China," as the old saying goes.  But in doing so, he issued a persuasive opinion that–on reflection–actually did my clients a favor, despite their having to endure an extra year of appeal by first passing through the district court. 

How so?  Well, Judge Gerber himself acknowledged that the successor liability issue was the “most debatable” and “most important” of the issues before the Court.  He also correctly observed that I’d like to see this issue decided by the Supreme Court (assuming I can’t get the Second Circuit to reverse itself or at least distinguish GM from Chrysler on the facts).  After all, 363 sales are so common nowadays that Baird and Rasmussen’s prediction in 2002 of the "end of bankruptcy" is now being viewed as a shocking–but inevitable–fact of life.  And the undeniable split in the circuits over whether 363 sales can be "free and clear" of successor liability claims makes the case ripe for Supreme Court review, particularly given the magnitude of the claims being left behind (GM and Chrysler alone have shed about $2 billion of these liabilities in the past 45 days). 

One thing we know about the Supreme Court, however, is that it doesn’t like to get "ambushed."  As Justice Ginsburg pointedly reminded counsel during oral argument in the Travelers Casualty v. PG&E case (discussed here):

We are a court of review. So no matter how well it’s been aired [in other circuit cases], we wait to see what the lower courts have said on a question. We don’t take it in the first instance.

Judge Gerber echoed these thoughts in his opinion denying my motion for direct appeal when he asked:

How could a decision presented and decided to the Second Circuit in two days (or on any other expedited basis) be helpful to the bankruptcy community, or the public, or the Supreme Court?   If the Supreme Court is to decide an issue that’s the subject of a Circuit split, doesn’t it deserve the best decision the Second Circuit can provide?

Hard to argue with that.  So, per Judge Gerber’s sound instruction, we’ll leave the "supercharged" Corvette ZR3 6.2L / 638 hp V8 at the dock and instead board the luxurious, brand-spanking-new, Bohai Zhenzhu, destination SCOTUS, with stops at the SDNY and 2d Circuit ports of call.

Bon Voyage!

© Steve Jakubowski 2009

[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

GM objection due tomorrow, so no time to pontificate on today’s "narrow" holding of the United States Supreme Court in Travelers Indem. Co. v. Bailey, No. 08-295 (pdf / WL).  Suffice it to say that those who sit by idly while their rights against third parties are enjoined from further prosecution do so at their peril. 

Here’s the "Reader’s Digest" version of the holding, written by Justice Souter for a 7-2 majority:

The Second Circuit erred in holding the 1986 Orders unenforceable according to their terms on the ground that the Bankruptcy Court had exceeded its jurisdiction in 1986.  On direct appeal of the 1986 Orders, any objector was free to argue that the Bankruptcy Court had exceeded its jurisdiction, and the District Court or Court of Appeals could have raised such concerns sua sponte.  But once those orders became final on direct review, they became res judicata to the parties and those in privity with them.

As I learned early on in law school from one of the smartest guys around, if you really want to find out what the case is about, read the dissent.  And if you want to know "what’s bothering Ruthie?", you’ll find it in dissent of Justice Stevens, in which she joined.  Justice Stevens dissented, he wrote, because:

In my view, the injunction bars only those claims against Manville’s insurers seeking to recover from the bankruptcy estate for Manville’s misconduct, not those claims seeking to recover against the insurers for their own misconduct.  This interpretation respects the limits of the Bankruptcy Court’s power….

We should not lightly assume that the Bankruptcy Court entered an order that exceeded its authority.  When a bankruptcy proceeding is commenced, the bankruptcy court acquires control of the debtor’s assets and the power to discharge its debts.  A bankruptcy court has no authority, however, to adjudicate, settle, or enjoin claims against nondebtors that do not affect the debtor’s estate.  Because Travelers’ insurance policies were a significant asset of the Manville bankruptcy estate, the Bankruptcy Court had the power to channel claims to the insurance proceeds to the Manville Trust.  But this by no means gave it the power to enjoin claims against nondebtors like Travelers that had no impact on the bankruptcy estate.  Thus, even accepting the Bankruptcy Court’s representation in 2004 that it had “meant to provide the broadest protection possible” to the settling insurers, such relief could not include protection from independent actions. (Emphasis added.)

The limits of the Bankruptcy Court’s power will be on display in the GM case as Judge Gerber is asked to do what Judge Gonzalez was unwilling to do in the Chrysler case; that is, respect the jurisdictional boundaries of the Court and the statutory directives of Congress and refuse GM’s request to bar present and future claims of product liability claimants from being asserted against the purchaser post-closing under applicable state law theories of successor liability. 

Much more on that to follow.

Happy hunting!

© Steve Jakubowski 2009

[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:

  • Maybe she doesn’t like the lawyers down the street telling her (as reported here by SCOTUS Blog) that "no court, including the Supreme Court, has the authority to hear a challenge by Indiana benefit plans to the role the U.S. Treasury played in the Chrysler rescue."  Tell that to Justice Marshall!
  • Or maybe, like her predecessors during the Depression in the Schechter Poultry Corp. v. US case, she’s wondering whether (as argued here by Ralph Nader) Congress abdicated the essential legislative functions with which it is vested by letting the Executive Branch alone structure and implement the deal.
  • As noted in my Part I analysis, however, I doubt she’s losing sleep over whether the sale is a sub rosa plan or whether the absolute priority rule was violated. 

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