CHRYSLER has been in bankruptcy for a little over a month now and is actually ready to get out of bankruptcy with the sale of most of its assets to FIAT. President Obama had indicated that he wanted Chrysler to have a quick prepackaged bankruptcy with the FIAT purchase and partnership, and it certainly looks that way. The Bankruptcy court has approved the reorganization plan, which calls in part for the sale of most of Chrysler’s assets to FIAT.
The sale was about to take place when a group of secured creditors objected to the sale to FIAT claiming that the sale prejudiced their rights as secured creditors. Since Bankruptcy courts are Federal Courts, appeal is made to the United States Court of Appeals, and thereafter to the United States Supreme Court. The Supreme Court has issued an order staying the sale to FIAT pending resolution of the creditor objections. Lawyers of Chrysler argued for a quick resolution of the objections by the Supreme Court saying that Chrysler was losing $100 million a day without the FIAT deal and implementation of the reorganization plan which had been approved by the Bankruptcy Court. The latest news is that the Supreme Court has rejected the objections of the secured creditors and has given its permission for the sale to FIAT to push through immediately without further delay. Thus, it is now certain that Chrysler will be out of bankruptcy before this month ends as a leaner and eventually profitable enterprise. Chrysler will be owned by FIAT, the US government, it’s union and employees, and creditors. From start to finish, Chrysler was in and out of Bankruptcy court in two months. But without FIAT and Uncle Sam in the equation, Chrysler’s bankruptcy would have ended with its liquidation in a Chapter 7 case, instead of reorganization in a Chapter 11 case.
There are several kinds of bankruptcy available. Chapter 11 is usually used by businesses to reorganize themselves when they have too much debt but can still become profitable again if they are able to get rid of a lot of their unsecured debt. Some individuals are able to use Chapter 11 to restructure their finances if they cannot qualify for Chapter 13 because their debt limits are too high. Many smaller developers of subdivisions hit by the recession are resorting to Chapter 11 to save their businesses but are unable to submit viable reorganization plans because they are not able to find bridge financing to see them through until new home sales get back to normal. They usually buy raw land with a small down payment, subdivide and develop the property into several tract or customhouses, but rely heavily on bank financing and quick sales of the new houses. With banks currently refusing to lend even though they have a lot of money to lend, and with no buyers in sight, these Chapter 11 cases eventually become Chapter 7 liquidation cases where the trust deed holders foreclose on the properties and auction them off to the highest bidder at fire sale prices. If you have cash, it’s certainly a great time to buy houses and land in foreclosure auctions. In Chapter 13, individuals are able to restructure their debts much in the same way that businesses are able to restructure debts in Chapter 11.
If you’ve had several foreclosures with outstanding second trust deeds, or if your residence is upside down and the mortgage payment is too big because of multiple trust deeds such as seconds or helocs, maybe you should consider a fresh start with a chapter 7 case instead if loan modification is not working your way. Or, if you just have too much credit card debt, Chapter 7 wipe out might be the way to go. A chapter 13 will allow you to annul and convert your second trust or home equity loan into unsecured debt.
If you need debt relief, contact my office. I will analyze your case personally.
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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave., Bldg. A-1 Suite 1125 Unit 58, Alhambra, CA 91803.
( Published on June 20, 2009 in Asian Journal Los Angeles p. C5 )
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