Under deals brokered by the Obama administration, the UAW's health-care trust would receive 55 percent of the new Chrysler in exchange for half of the $10.6 billion owed to the fund by the company.
"Upsetting this fixed hierarchy among creditors is just an illegal taking of property from one group of creditors for the benefit of another, which should be struck down on both statutory and constitutional grounds," University of Chicago law professor Richard Epstein, a leading conservative legal scholar, wrote in a Forbes magazine article titled, "The Deadly Sins Of The Chrysler Bankruptcy."
The Supreme Court's action in the Chrysler deal could have implications for the government-brokered bankruptcy of General Motors Corp., Skeel said. There is less of a problem with bondholder treatment in the GM case, because they are not secured creditors.
But the GM bankruptcy has other potential problems, including less urgency than Chrysler's. The Supreme Court action in Chrysler's case could slow the Obama administration's hope for a speedy resolution of GM's bankruptcy, Skeel said.
Catching up with GM
WHERE BANKRUPTCY FILING STANDS:: U.S. Judge Robert Gerber approved motions last week allowing the company to continue its normal business operations while under bankruptcy protection. Gerber also approved GM's access to $15 billion in government-provided bankruptcy protection financing to fund its operations for the next few weeks. On Friday, GM continued reshaping its future, announcing a tentative deal to sell its Saturn brand to auto racing magnate Roger Penske's dealership chain, Penske Automotive Group Inc. GM also said it will pay $2 billion to Delphi Corp. to aid in the sale of the automotive parts supplier to a private equity firm, in exchange for equity of a newly restructured Delphi, which is struggling to emerge from its own 2005 bankruptcy protection filing.
WHAT'S NEXT?:: GM's next major hearing is scheduled for June 25, when it will ask for final approval of its full $33.3 billion in debtor-in-possession financing. A hearing on the proposed sale of the bulk of GM's assets to a new company is scheduled for June 30.
- Associated Press
