David A. Skeel Jr. writes:
> The use of a sham sale of the sort the New Dealers thought they had
> forever eliminated will cause mischief in future bankruptcy cases.
> As the administration has pointed out in defense of its plan to
> commandeer the bankruptcy process, asset sales (known as 363 sales,
> based on the relevant provision) have become a common feature of
> Chapter 11 cases in the last 20 years. What makes the Chrysler plan
> unique, and makes it similar to the receiverships of the New
> Dealers' era, is that it is not really a sale at all. It is a
> pretend sale and its main purpose is to eliminate the pesky
> creditors who might otherwise interfere with the government's plans.
> It also seems to flout bankruptcy's priority rules by giving
> Chrysler's employees (who are general creditors) a big stake in New
> Chrysler while forcing senior lenders to take a major haircut. The
> usual rule is that senior creditors must be paid in full before
> lower priority creditors are entitled to anything.
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