Soft Corinthian Leather Conditioned with Chapter 11

The Chrysler Corporation has been down this treacherous road before, encountering a word that causes shivers to rise up the spines of many a wary soul: bankruptcy. History is about to repeat itself, and not for the better. Chrysler’s senior management is not planning to go the way of other beleaguered Big 3 members. Consider this anecdote: facing rising oil prices and an underdeveloped line of compact cars, late 1979 saw Chrysler tapping former Ford executive Lee Iacocca to extricate itself from the brink of the “B” word. A $1.5 billion petition for U.S. government-backed loan guarantees was drafted, but Iacocca’s ego wouldn’t stomach being saddled with massive amounts of debt for long. Under his watch, the military bought thousands of Dodge pickup trucks which entered military service as the commercial line M-880 Series. Its defense line was shored up to General Dynamics for $348.5 million. He prodded workers to meet the challenge head-on, and the ultra-profitable (and ultra-efficient) K-car and the minivan concept were born. Within 3 years, all loans were paid off and Chrysler was back in the black.

Fast forward to the last couple of years. Chrysler again is on the chopping block, this time due to yet another lack of response to the growing need for alternative energy vehicles and economical passenger cars, but primarily bolstered by their considerably higher wages (compared to their Japanese and European counterparts) due to their unionized workforces, including salaries, benefits, healthcare, and pensions. In return for labor peace, management granted concessions to its unions that resulted in them having uncompetitive cost structure and significant legacy costs. Now, in 2009, Chrysler is strapped for cash and in dire straits. Fiat may very well be its savior. Announcing a global alliance with Chrysler in January, Fiat planned to take a 35% stake (later revised to 20%) in Chrysler (with influence on top management structure) and gain access to its North American dealer network in exchange for providing Chrysler with the platform to build smaller, more fuel-efficient vehicles in the US and reciprocal access to Fiat’s global distribution network. A government imposed deadline to reach this deal was imposed for April 30 and Fiat stipulated the merger was contingent on Chrysler reaching an agreement with the UAW and the Canadian Auto Workers’ Union. This past Sunday, it appeared as if Chrysler had reached a deal with the unions which would meet federal requirements, though details were not made available. Chrysler said the union agreement “provides the framework needed to ensure manufacturing competitiveness and helps to meet the guidelines set forth by the U.S. Treasury Department.”

Nonetheless, today, Chrysler filed for chapter 11 protection in Manhattan, and forged ahead with its proposed Fiat alliance. Both the White House and Chrysler expressed hope for a “surgical” bankruptcy lasting 30 to 60 days, clearing the company’s liabilities and allowing it to emerge in healthy shape.

The point to keep in mind here is that this Chapter 11 protection was done in a legitimate, above board manner. It did not employ abusive tactics used by greedy lawyers and litigants employing underhanded motives such as forum shopping in our bankruptcy courts. Are you listening, Howard K. Stern?

We wish Chrysler the best in its attempt to again rise, Phoenix-like and begin a new chapter of providing the world with innovative and efficient modes of transportation.

April 30th, 2009

Posted in Uncategorized

A Court At A Crossroad

The 9th Circuit U.S. Court of Appeals could be undergoing a further shift towards the center, a far cry from its century and a half tradition of judicial liberalism. The largest of 13 appellate courts, it sees cases emanating from 9 western U.S. states ranging in topic from civil law, criminal law, immigration to the death penalty, and bankruptcy. The most notable of the latter is a case which I have (and will) continue to cover with intense scrutiny, namely the J. Howard Marshall/Anna Nicole Smith estate feud. As would be expected, this trend is not without its detractors and supporters. Those opposed fear that the court will lose its signature element of jurisprudence rooted in empathy and human emotion, a facet that attempts to steer clear of rote, by-the-book, procedural-based decision-making. Those in favor argue that the leftist leanings have historically created deformities in the justice system, such as “forum shopping” by plaintiff, and frequently use the Marshall/Smith case as an example. Some vacant judicial openings are forthcoming, and the first challenge could be the most important of their lives.

June 26, 2009, could be a watershed date. This date is when the aforementioned ponderously overanalyzed case from the Supreme Court, handed back to the 9th, will be revisited for further articulation. Oral argument will be conducted in Seattle at the William Kenzo Nakamura United States Courthouse. The parties shall address, at a minimum, the following issues: (1) whether Vickie Lynn Marshall’s (“Vickie”) claim was a “core” bankruptcy proceeding; (2) if Vickie’s claim was not a “core” bankruptcy proceeding, whether the Texas probate court’s judgment precludes Vickie’s claim, in whole or in part; (3) whether the statute of frauds affects Vickie’s ability to establish her claim; (4) whether the discovery sanctions ordered by the district court were reasonable; and (5) if Vickie’s surviving child is a real party in interest and has no guardian ad litem, whether the court should appoint a guardian ad litem and, if so, who the guardian ad litem should be and what provisions should be made for the guardian ad litem’s compensation.

The 9th should uphold the Texas ruling and this conundrum can finally be laid to rest, as so many deceased parties akin to this matter have been. Should the Smith-Stern ship of fools end up winning, it sets a dangerous precedent by granting influence to federal law intervening in state probate matters. Interestingly, J. Howard Marshall was a Yale law professor who taught, of all things, wills and trusts. If a wills and trusts professor can’t protect his own estate, then who can.

April 30th, 2009

Posted in Uncategorized

Switcharoo Specter Saddles Up A New Donkey

After 43 years of representing the GOP, Senator Arlen Specter has switched sides. The newly minted Democrat advised reporters he had become increasingly uncomfortable as a moderate in a party dominated by conservatives and bluntly admitted his decision was based on his assessment he could not win reelection as a Republican next year. President Obama stated he would lend Specter his full support throughout that upcoming campaign. Reaction from fellow Republicans has been, to put it bluntly, harsh. Sen. Olympia Snowe of Maine called the defection “devastating news” and a wake-up call for the GOP to treat its moderate members better or face becoming a marginalized, mostly Southern party. Sen. Jim Inhofe felt outrage at the news, and delivered the following salvo:

“From what I understand, Senator Specter and his left-leaning positions would lose by 15 points in an upcoming Republican primary challenge. Therefore, switching parties seems to have been done out of desperation and finding a way - any way - to stay in Washington longer. The big question now will be whether Democrats in Pennsylvania will embrace Specter or defeat him in the upcoming Democratic primary. I believe the fact that a little known conservative Republican could gain such a lead, and force a long time moderate Senator to switch parties, is the first evidence of America getting fed-up with out of control billion dollar spending here in Washington. The outrage growing throughout the country may very well end up leading to another Republican revolution as last seen in 1994.”

Considering the hastiness of the decision, it’s no wonder Washington is up in arms. We’ll keep you posted on developments as they occur, especially if Lady Justice is called to take action.

April 29th, 2009

Posted in Uncategorized

Letting Sleeping Dogs Lie

Leona Helmsley’s wishes are going to the dogs. Two years before her death, the infamously wealthy hotelier and real estate mogul attempted to have the proceeds from her $5 billion charitable trust primarily go to “purposes related to the provision of care for dogs.”

Her grandchildren have asserted that Helmsley was not mentally competent when she signed her will; a judge ruled in February that trustees could give the money as they saw fit. These facts were a factor in the doggie disbursements being lowered to a mere $1 million split among 10 charities, including some that train seeing-eye dogs, dogs for the deaf, and another that trains inmates to raise puppies to become bomb-sniffers. The remaining funds have been awarded to a variety of other charities.

April 27th, 2009

Posted in Uncategorized

Proactively Prescribing A Death

Anna Nicole Smith’s death was linked to a deadly cocktail of prescription drugs, but can she alone be responsible for her untimely passing? The more we examine this case, the more it appears those entrusted with her care were actually eschewing that important role. We are not implying HKS and the two doctors implicated in the case had murderous intentions, but simply hypothesizing that she could be alive today had those parties not enabled her.

Take, for instance, the two abscesses on both her buttocks and the back of one thigh, concurrent with regular injections of (possibly) chloral hydrate, a sleep aid listed on her toxicology report. Smith’s liver and kidneys were enlarged and congested, most likely due to enormous amounts of prescription drugs. Soon after the death of her son Daniel in September 2006, Smith enlisted the services of psychiatrist, Dr. Kristine Eroshevich, who obtained a list of 6 drugs. All 6 of these were known to be addictive; the most surprising was Prexige (an non-steroidal anti-inflammatory) banned by the FDA (but approved in the EU) because of high incidents of ….enlarged and congested livers.

According to Attorney General Jerry Brown, Smith was at the point of “stupefaction” with the thousands of pills she was ingesting. Can a person in this condition truly be capable of self-medicating to her own demise? Shouldn’t her caretakers have been more proactive, if their goal was to rehabilitate?

April 23rd, 2009

Posted in Uncategorized