Legal News

Chrysler Judge Arthur Gonzalez: No Stranger to Big Cases

By Ashby Jones

There’s presumably much handwringing going on among all the parties involved in the Chrysler bankruptcy. But, judging from reports out today, the parties probably need not spend too much time worrying about the judge on the case — Arthur Gonzalez of the bankruptcy court for the Southern District of New York. Click here, here, and here for stories from the WSJ, NYT, and Bloomberg, respectively.

Judge Gonzalez is no stranger to big, high-profile bankruptcies. He presided over the filings in Enron and Worldcom — and, judging from some of the players on those cases, did a bang-up job of it.

Dewey & Leboeuf’s Martin Bienenstock, who represented Enron in its bankruptcy, told the WSJ’s David McLaughlin that Gonzalez isn’t afraid of taking novel approaches to move complex cases along. In the Enron case, for instance, Gonzalez set 15-minute trials to determine the fate of thousands of claims. As a result, most creditors ended up settling. “I think he’s a judge you can count on to do the right thing and not be pressured by anyone,” Bienenstock says.

"I think it's a good thing for everyone involved - the creditors, the company," said Paul Hastings’s Luc Despins, who represented Enron's creditors, to the NYT. "He's just a very efficient and very organized judge. He's used to dealing with huge cases with huge dockets."

Frankly, in reading both stories, we were perhaps most taken by Gonzalez’s personal story. From 1969 to 1982, he taught math in a New York City elementary school. Then, after getting a law degree from Fordham Law School at night, he was a staff attorney for the Internal Revenue Service in New York and spent three years in private practice.

In 1991, he joined the U.S. Trustee’s office, an arm of the Justice Department that monitors bankruptcy proceedings. He was appointed a federal bankruptcy judge In 1995.

Granted, in many ways, the Chrysler case offers nuances and complexities that even Enron and Worldcom didn’t. For starters, Gonzalez will have to wrestle with the presence of the Obama administration, which both brokered and funded a deal aimed at keeping Chrysler alive.

The Obama plan requires that secured lenders make concessions to unsecured creditors — namely employees in the United Auto Workers union — a step that would be at odds with decades of bankruptcy practice. And as we outlined in a post yesterday, those creditors could stymie a process that President Obama has said “will be quick.”

Full post as published by Law Blog - WSJ.com on May 01, 2009 (boomark / email).