Document Type
Article
Publication Date
2015
Abstract
In the past five years, three of the most remarkable bankruptcy cases in American history have come out of Detroit: the bankruptcies of Chrysler and General Motors in 2009, and of Detroit itself in 2012. The principal objective of this Article is simply to show that the Grand Bargain at the heart of the Detroit bankruptcy is the direct offspring of the bankruptcy sale transactions that were used to restructure Chrysler and GM. The proponents of Detroit’s “Grand Bargain” never would have dreamed up the transaction were it not for the federal government-engineered carmaker bankruptcies. The Article’s second objective, based the comparison of the Detroit cases, is to make a very brief case for reform of bankruptcy sales.
Part I of the Article briefly surveys the increased use of bankruptcy sales and related shifts in Chapter 11 practice over the past several decades. Part II describes the Chrysler and General Motors bankruptcies, which built on but radically expanded the scope of a bankruptcy sale. Part III turns to the Detroit bankruptcy, focusing primarily on the “Grand Bargain,” while also exploring the city’s use of another recent bankruptcy strategy, known as “gifting.” The Article concludes, in a brief final part, that the Detroit cases have pushed recent bankruptcy innovations to their logical extremes—and beyond— exposing the need to update the oversight of bankruptcy sales.
Keywords
Municipal Bankruptcy, Section 363 asset sales, absolute priority rule, unfair discrimination, bailouts, bankruptcy oversight and regulation, pension restructuring, union contracts, gifting, Chapter 11, Chapter 9, debtor in possession financer, sub rosa plan, qualified bidder requirements, Detroit, Detroit Institute of Arts
Publication Title
Widener Law Journal
Repository Citation
Skeel, David A. Jr., "From Chrysler and General Motors to Detroit" (2015). All Faculty Scholarship. 1420.
https://scholarship.law.upenn.edu/faculty_scholarship/1420
Included in
Bankruptcy Law Commons, Business Law, Public Responsibility, and Ethics Commons, Corporate Finance Commons, Courts Commons, Economic Policy Commons, Finance Commons, Law and Economics Commons, Law and Society Commons, Legal History Commons, Policy Design, Analysis, and Evaluation Commons, Public Economics Commons, Retirement Security Law Commons, State and Local Government Law Commons
Publication Citation
24 Widener L. J. 121 (2015)