DealZone

Live: GM bankruptcy court hearing

GM cleared several of the hurdles on its way out of bankruptcy Thursday at a court hearing in Manhattan. The federal bankruptcy judge gave GM the final ok to tap the rest of its $33.3 billion bankruptcy financing and a lawyer for asbestos claimants withdrew a request for official committee status. Other obstacles including the status of non-union retirees rights to healthcare benefit– are on the agenda for the afternoon. We’ll be filing updates from the hearing in the live headline box below and on our Twitter feed.

Chrysler pleadings innundate court

The Chrysler bankruptcy hearing has swamped a Manhattan court with an unprecedented number of pleadings, according to docket tracking service NetDockets.com.

In the first 45 days of Chrysler’s bankruptcy, attorneys filed more than four times the number of pleadings than over the same period for collapsed corporate giants WorldCom or Enron.

More than 4,200 pleadings were filed in the Bankruptcy Court for the Southern District of New York, said NetDockets. That’s more than the 967 pleadings related to Enron in the first six weeks, or even Lehman Brothers Holdings’ 1,362 pleadings.

Desert Hockey

James Balsillie, the co-CEO of Research-in-Motion, can’t seem to catch a break. Having failed in previous efforts to buy NHL teams in Pittsburgh and Nashville and move them to Hamilton, Ontario, he’s now been shut out in his bid to buy the bankrupt Phoenix Coyotes. Arizona bankruptcy Judge Redfield Baum ruled late on Monday that a June 29 deadline set by Balsillie did not allow enough time to settle the complex case. It’s a shame things were so rushed. The decision could yet be a game changer for struggling sports franchises.

Balsillie (pictured above enjoying the game from the ice) and the owner of the Coyotes, trucking magnate Jerry Moyes, offered to put together a $212.5 million deal in May, when the franchise filed for bankruptcy protection, to move the team to Hamilton, about 200 miles northwest of Buffalo, N.Y. But NHL says the franchise is contractually obligated to stay in Phoenix.

Being a judge, Baum took the liberty to say both sides are wrong. He rejected Moyes’ attorneys’ argument that antitrust law allowed the sale and relocation of the Coyotes without NHL approval, and he dismissed concerns of other sports leagues that allowing the Coyotes to relocate would encourage other financially struggling teams to use bankruptcy court to get around league rules.

“Big Loan”, big problem

Rob “Big Loan” Verrone was the banker with the big name behind the 2007 acquisition of now-bankrupt Extended Stay.

His nickname was trumpeted in the hotel chain’s 2007 press release detailing the deal — in retrospect perhaps not the best quality to shout about.

Big Loan, described as one of three who provided the mortgage and mezzanine financing, moved on from Wachovia according to a Wall Street Journal report last year, and we couldn’t immediately track him down for comment.

Faster than a speeding bankruptcy

After enjoying a bit of confusion from savior Fiat about the imperative of a June 15 deadline, and a quick, 24-hour trip to the Supreme Court, Chrysler creditors now know in no uncertain terms just how much political will there is behind getting the automaker’s government-orchestrated deal done.

The top U.S. court can certainly be counted on to ponderously deliberate matters of vital importance to the nation. But when the consequences of delay are dire (thousands of auto workers’ jobs, a U.S. presidency, etc.), a decision to not make a decision can come with lightning speed.

In a brief two-page order, the justices said opponents of the Fiat-Chrysler deal had not met the burden of showing the Supreme Court needed to intervene. The court’s action was not a decision on the merits of the challenge, they said. The Chrysler dispute marked the first time the Supreme Court had been confronted by legal issues involving the federal government’s power to deal with the economic crisis.

Live blog of the Chrysler bankruptcy hearing

Reuters will be sending live updates from the Chrysler bankruptcy hearing, on the automaker’s plan to reject 789 dealership franchises, expected soon after 0830 ET. Read the updates below or follow us on Twitter.

Chrysler lawyer’s e-mails show doubts on speed of deal

Opponents seeking to slow down Chrysler’s blitz through bankruptcy court received unexpected support for their argument on Wednesday: Chrysler’s lead attorneys. 
    An email that turned up during discovery showed that Jones Day attorneys tried to discourage the U.S. government from setting a June 15 deadline for completing a sale of most of the automaker’s assets to a group led by Fiat.
    A lawyer for a group of Indiana pension funds, which oppose the sale, read the email in court which showed Jones Day attorneys said the tight schedule would undermine the credibility of their case, called the time frame a mistake and said it would “stuff the judge” by forcing such a rapid hearing schedule.
    “The debtor lost that one,” said the Indiana fund’s attorney, Glenn Kurtz of White and Case, referring to Jones Day recommendation regarding the deadline.
    Judge Arthur Gonzalez overruled Jones Day attorneys who objected to entering the email, which the U.S. Treasury released during discovery, because it was not meant to be public and tapped into Chrysler’s legal strategy.

-By Tom Hals and Emily Chasan

Liveblogging Chrysler in court

Reuters’ Emily Chasan will be sending live updates from the Indiana pensioners’ challenge to Chrysler’s bankruptcy in U.S. District Court scheduled to begin at 11:30 am on Tuesday. Read her updates on DealZone or follow the DealZone Twitter account.

Ball bounces in GM bondholders’ bankruptcy-bound court

Holders of $27 billion of General Motors‘ unsecured debt have until midnight tonight to decide whether to exchange it for equity, and the chance that the once mighty auto giant will get the 90 percent participation it says it needs to avoid bankruptcy protection is looking just as remote as it did a week ago.

Based on its assets at the end of the first quarter, GM’s filing would be among the biggest U.S. bankruptcies ever, and could be one of the trickiest to work through among the myriad interested parties.  Of key interest to markets is how much TARP money GM might need for DIP financing. GM cleared a key obstacle in its restructuring last Thursday when it reached a sweeping deal on concessions with the United Auto Workers. Canada’s union also says it is on board.

There are two big problems with leveling charges of obstructionism and intransigence at the thousands of GM bondholders. It’s a diverse group, so expecting a unified voice would be a stretch in any case. There are those who argue that all GM investors are being hurt and creditors shouldn’t expect to be spared. The problem is that the deal brokered with Obama’s task force attempts to save at least part of the company from an outright bankruptcy, preserving better assets for a new and improved company that bondholders would then own. Such a solution keeps bond holders from being able to sell them off for their pennies on the dollar. Instead it lumps them in with shareholders, but with none of the upside equity investors get for their risk.

Back from the dead?

French and German Military surgeons perform abdominal surgery on an Afghan civilian patient at the French Military Hospital in KabulChrysler’s troubles looked so great even its own executives thought the company was headed for liquidation, however emergency surgery in the bankruptcy courts appears to have saved the patient.

As Caroline Humer and Tom Hals write, the sale of Chrysler’s main business to Italy’s Fiat and other groups looks likely to be sealed by the end of May, taking most of the company out of bankruptcy within just 30 days, hitting the government’s target deadline.

Judge Arthur Gonzalez has been instrumental in driving through the process, quickly rejecting objections from a range of creditors. A few sticking points could still hold up the sale, with a group of Indiana pension funds filing suit in a separate court, but most specialists expect the judge to approve the sale to Fiat at Wednesday’s hearing.