Chrysler and Affiliates File for Bankruptcy Protection

Chrysler LLC and related affiliates (“Chrysler”) filed voluntary bankruptcy petitions on April 30, 2009, in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). Chrysler intends to continue to operate its businesses while in bankruptcy. Chrysler’s non-U.S. subsidiaries do not appear to be included in Chrysler’s U.S. bankruptcy filing and will continue to operate outside the supervision and jurisdiction of the Bankruptcy Court.

On April 8, 2009, the Second Circuit Court of Appeals issued a ruling that creates an additional hurdle for companies providing single-employer pension funds when seeking to reorganize through a bankruptcy. In general, the termination of a pension plan can give rise to a per-employee termination premium (a “Termination Premium”) owed by the company terminating the plan to the Pension Benefit Guaranty Corporation (“PBGC”), the quasi-governmental entity that insures pension plans.

In a recent decision, the Bankruptcy Court for the District of Delaware allowed the collateral agent for senior lenders to credit bid for the debtors’ assets even though all of the senior lenders had not authorized the bid. One of the senior lenders had objected to the group’s acquisition of the debtors’ assets by the credit bid. In re GWLS Holdings, Inc., 2009 WL 453110 (Bankr. D. Del. Feb. 23, 2009) (Walsh, J.).

A bankruptcy filing by a property owner may not be the only action that prevents foreclosure of a security interest in that property held by a secured creditor. In a growing list of cases, courts also have held the bankruptcy of a junior secured creditor with a lien on the property invokes the automatic stay against such action.

Yesterday, in a filing with the Securities and Exchange Commission, General Motors announced that it is currently attempting to restructure debt held by the U.S. Treasury Department. Under a current proposal, GM would convert at least 50% of its debt held by the U.S. Treasury Department into common shares. As a result of the conversion Treasury would hold greater than 50% of GM’s common shares.

The Superior Court of Delaware recently held that a D&O insurer failed to timely respond to it insured’s reimbursement requests and must therefore provide reimbursement for prior legal defense costs and advance future defense costs within sixty days of receipt of invoices. HLTH Corp. v. Axis Reinsurance Co., et al., No. 07C-09-102, 2009 WL 756306 ( Del. Sup. Ct. Mar. 23, 2009).

Yesterday, in a bankruptcy court hearing held for Chrysler LLC (and 24 of its wholly owned subsidiaries), which filed for Chapter 11 bankruptcy protection last Thursday, U.S.

Today, the House Financial Services Committee, chaired by Representative Barney Frank (D-MA), held a hearing on the effects of the Lehman Brothers bankruptcy on state and local governments and other publicly-funded entities.

Testifying at the hearing were the following witnesses:

Panel One:

Chrysler's bankruptcy filing, which occurred on April 30, has generated considerable activity already. Baker Hostetler has been monitoring closely the Chrysler activity for our supplier clients. We attended the hearing on the first day filings, which were generally ministerial in nature. The court approved joint administration, maintenance of cash management/business forms, enforcement of automatic stay, payment of wages, and honoring of all warranties.

The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.  

AGRICULTURE  

Greenhouse farmer Eurofresh Inc. files Chapter 11 in Arizona.  

AUTOMOTIVE