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Academic

: Conglomerate

Standing Even Works In Bankruptcy Court

By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring

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Is the proposed quickie sale of Chrysler to New Chrylser/Fiat a taking under the constitution? Many think yes, I tentatively think no, and Rick Hills expressed some concerns here. What does the bankruptcy court think?

It has obviously learned from its administrative law counterparts, in that it has used the standing doctrine to duck the issue - or at least to conclude that the Indiana pension funds making the most of the takings argument had not established a likelihood of success on the merits:

The movant claims that there are several novel and constitutional issues of first impression raised
by the proceedings before the Court ....
First, the movant argues that the Treasury Department acted outside the statutory scope provided
by Congress under the Troubled Asset Relief Program (?TARP?) and Emergency Economic
Stabilization Act of 2008. Further, the movant alleges allowing the Sale Hearing to go forward
would result in an unconstitutional taking of property under the Fifth Amendment of the
Constitution.
However, the movant?s papers do not address the fundamental issue of whether they have
standing to challenge any governmental action. There are substantial issues and disputes
concerning the movant?s standing both under the Collateral Trust Agreement as well as the
Supreme Court?s standing jurisprudence. Without having addressed these issues, the Court
cannot say that the movant has clearly demonstrated that they have a substantial likelihood of
succeeding on the withdrawal motion.

And that's it - classically unsatisfying in the we're-ducking-this-because-there-might-be-standing-issues vein, and you'd think the Indiana funds either hold interests in secured Chrysler debt or they don't (if they do, they would seem to have the prospect of injury if they get less than whatever the value of the collateral is, which would seem to be enough for standing). I don't even think that intervenors have to demonstrate standing other than through their complaint/intervention motion, though the court seems to be requiring something more here. But the court is being tentative, no final decisions, and it certainly has plenty of other things to do. You can find the order here by searching for the term "Indiana."

Full post as published by Conglomerate on June 02, 2009 (boomark / email).