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Fire Sale: Chrysler and GM bankruptcies highlight the dominance and evolution of 363 sales

Object Lesson

Many, including one of Chrysler's secured creditors, a group of Indiana pension funds, argued in a challenge to the sale in bankruptcy court that the 363 sale was in fact a sub rosa plan, or a backdoor reorganization disguised as a 363 sale as an end run around creditor protections attached to the stringent reorganization process. If it was, Chrysler would have to submit a plan of reorganization and allow creditors to object to it.

Narrow Impact

GM and Chrysler were two massive companies on the verge of collapse in the worst economic crisis of our time. The government was standing by ready to write a check, and the only other option the companies had, as they asserted and as the judge in Chrysler's bankruptcy case seconded, was liquidating--a costly, complicated process. Those extraordinary circumstances make it unclear how much the Chrysler and GM precedent will apply to other 363 sales.

Associate Editor

Melissa Maleske

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