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May 6 (Bloomberg) -- You can call the plan to merge Chrysler and Fiat good for the economy. You can think it creative.
You can say it’s the start of “a vibrant new company,” as Chrysler LLC Chairman Robert Nardelli did last week.
But there’s one word that you can’t call the Chrysler bankruptcy package: legal.
The dissidents say the sale is nothing more than what bankruptcy law calls a sub rosa reorganization, a secret reordering dressed up to look like a sale, which the law forbids.
Plus, would it even be a true sale?
In public statements Chrysler says a United Auto Workers health benefits trust would get 55 percent of the shares of New Chrysler and a $4.6 billion note to satisfy some of the group’s unsecured claims against the company.
Paying nothing but offering its fuel-efficiency expertise, Fiat SpA would own 20 percent initially and could increase its stake by another 15 percent. The U.S. and Canadian governments, which are providing billions in interim financing, would own the rest.
Chrysler is essentially selling itself to itself, says Lynn LoPucki, a law professor at the University of California, Los Angeles. He teaches secured transactions and maintains a database of major bankruptcies.
Already the Chrysler case is one for the books. You have the federal government sending a company into bankruptcy court, financing its reorganization, deciding who will get what, setting a strict timetable and urging a judge to blink at the law.
If the argument that Chrysler’s welfare is so critical to the national interest that longstanding laws can be ignored, what’s next?
Some future president will find a way to justify blatantly illegal conduct. Such as torture.
I ended up leasing a Mercedes Benz ML 350 for $650 a month, that’s just $100 dollars more than the bottom line on the Chrysler Crapspen, and I drive a beautiful car built in ALABAMA!