Courts Affirms Chrysler Sale

From the WSJ: Court Affirms Chrysler Sale but Puts Deal on Hold Until Monday

From attorney Steve Jakubowski at the Bankrutpcy Litigation Blog: Chrysler's Bankruptcy Sale Opinion - Part I: Proving "What Goes Around, Comes Around" Well it's official, and really no surprise:

Judge Gonzalez in this opinion (WL) approved the sale of Chrysler's assets in the Fiat Transaction "free and clear of liens, claims, interests and encumbrances."
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Was it a sub rosa plan? The Court said no. And I actually agree. ...

Was the absolute priority rule violated? The Court danced around this issue pretty well, taking the position, well stated in this Credit Slips blog post, that "the allocation of ownership interests in the new enterprise is irrelevant to the estates' economic interests" and that "in addition, the UAW, VEBA, and the Treasury are not receiving distributions on account of their prepetition claims ... [but] under separately-negotiated agreements with New Chrysler ... [that are] not value which would otherwise inure to the benefit of the Debtors' estates."
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Has the "Rule of Law" Been Withered (as questioned here)? Maybe, as I'll discuss later in Part II, but not for the reasons the Indiana Pension Funds are arguing on appeal. In fact, if anything, the following well-worn rules have been affirmed in this case:

1. You can't circumvent chapter 11's plan process when you can't even fund next week's payroll.

2. You can't violate the absolute priority rule if junior creditors necessary to the new enterprise get something out of the deal.

3. Lenders of last resort owe no duty to anyone but themselves and can dictate the terms of a plan or sale so long as the terms aren't unconscionable, which they aren't here.