New York, NY, JULY 6, 2008 – THE UNOFFICIAL COMMITTEE OF FAMILY & DISSIDENT GM BONDHOLDERS (”F&D Committee”), announced today that it will not likely pursue appeals from the Bankruptcy Court’s July 5, 2009 decision approving the sale of General Motors assets under section 363 of the Bankruptcy Code. The F&D Committee’s decision was largely driven by the enormous costs expected to be incurred in appeals. Committee chair Hal John stated that “the Committee members today simply lack the resources needed to mount an effective appeals process on the accelerated basis that would be required here. The entirely new and expensive level of commitment that would be needed is regrettably beyond our means.” John added that “we are grateful to the Patton Boggs law firm and proud of their excellent and valiant efforts on our behalf.”
Michael P. Richman, chair of Patton Boggs’ bankruptcy and restructuring practice group, and leader of the engagement for the F&D Committee, said that while there are important facts and arguments that make this a very different case from Chrysler, limited financial resources force a close look at “certain realities in assessing the efficacy of appeals.” He stated: “As we saw in Chrysler, we are operating in a legal and political climate in which tremendous deference has been, and we expect will continue to be, given by the appellate courts to the Bankruptcy Court.”
According to Richman, the appellate courts could hold that section 363 of the Bankruptcy Code was not intended to be and should not be used in this manner. “Our position on appeal would have been that in enacting section 363 as part of chapter 11, Congress intended that it would only be used for legitimate sales to commercial purchasers, and not for a Government-sponsored rescue where the Government is the only purchaser. As I argued at the hearing on July 2, this transaction in substance is a nationalization without legislative authority. It bypasses both Congress and the creditors’ rights that Congress attached to the confirmation of chapter 11 plans.”
There remains the possibility that the F&D Committee could raise funds to support an appeal effort, or that other objectors will press these arguments successfully. The F&D Committee has no plans to disband and if an appeal is successful it will likely continue to be active in the chapter 11 process going forward.
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Please Direct All Inquiries To:
Michael P. Richman, Esq.
Patton Boggs LLP
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