Steve Jakubowski has a couple of posts on the Chrysler case worth reading, here and here. The second post, on the feasibility of a section 363 sale here, is especially interesting. A quick 363 sale as a going concern seems to be the key to the government’s notion that the case can be essentially processed in 30-60 days.
Mark Roe in the WSJ today is more skeptical: “A Chrysler Bankruptcy Won’t Be Quick.” I tend to agree with Roe–I just can’t imagine this case moving as quickly as the government hopes. Nor is it obvious to me why exactly such haste would be necessary.
I was confused by one point that Roe makes, though:
Meanwhile, Fiat will want to rationalize Chrysler’s bloated dealership network. Indeed, this once seemed a core aspect of any effort to reconstruct Chrysler, so the last day’s focus on a few secured creditors seems misplaced. But terminated dealers won’t go quietly. They’ll argue that their contracts can’t be easily rejected by a bankruptcy judge because they’re protected by state franchise laws. And in any event, they are entitled to some form of payment (reduced or otherwise) from a bankrupt Chrysler if their dealerships are terminated.
I would have thought that section 365 would preempt state franchise laws on this when it comes to rejection. I understand why 365 would be a problem for assumption, but do these laws erect a barrier in bankruptcy to rejection? Any insight appreciated.
Finally, I agree with the WSJ editorial board on the big picture: getting this out of the political process and into the bankruptcy process is the best way to try to rehabilitate Chrysler and get it to a satisfactory outcome.