Fighting Bankruptcy with Bankruptcy
In an interesting panel discussion yesterday at the National Automotive Finance Association conference, Larry Young, a partner at the Houston law firm of Hughes Watters Askanase LLP, proposed that “rejected” Chrysler dealers looking to forestall their terminations should “file their own Chapter 11.”
The “automatic stay” that is part of the bankruptcy filing prevents all entities from exercising control over the estate. If the dealer files, then there are two parties in bankruptcy, each with an automatic stay. It becomes a standoff, he said, adding that “the hope is that the dealer can possibly outlast the manufacturer in Chapter 11.”
At the least, it might help dealers — who were given a June 9 deadline to shutter operations — buy some time to negotiate or liquidate.
Aside from that, “there’s nothing else dealers can do,” he said.
