With the Chrysler sale hearing slated to begin Wednesday
morning, the attorneys at Jones Day are no doubt spending their Memorial Day
weekend writing an omnibus response to the many objections already on the docket, as well as negotiating
resolutions to the myriad cure payment objections that have also been filed.

I thought of them (briefly) while I was at the Shake Shack
with my family today. There
are definite advantages to academia.

And while I can never hope to blog on all those objections, I thought I might address a few of the more interesting
ones in the next few posts.  I’ll
start with an objection by the “Committee of Affected Dealers,” who I mentioned
earlier.

It appears that the Dealers have a few law firms working for
them – still no Rule 2019 statement, however – and the objection I’m focusing on
here was filed by their “Special Counsel.”

This objection argues that 363(f) will not operate on the
Dealers' rights under state franchise law, and thus the Affected Dealers will
have viable rights to remedies for unjustified termination under state law.  Put to one side what this argument does
to §365, which the Dealers never really address, and instead focus on the
fascinating argument they make under §363(f).

First, they argue that the Dealers' rights under state
franchise laws are interests for purposes of §363(f).  I’ll admit, I first thought counsel had lost it here.  Why would you want to admit that you
have an “interest” for purposes of §363(f) when you are arguing that §363(f)
does not apply to your claim?

But it all became clear in the second part of the
argument.  Namely, given that the
rights under state franchise law are interests, no subpart of §363(f) applies
to these interests, because they are not liens or other interests expressly
mentioned in subparts (1) through (5). 
A really clever argument.

One problem:  it
seems to have a fatal flaw.  The
Affected Dealers cite the 3d Circuit’s opinion in In
re Trans World Airlines, Inc., 322 F.3d 283 (3d Cir. 2003) to support their broad
definition of “interests.”  That
opinion also holds that EEOC claims and travel vouchers promised as part of a
settlement agreement are not only interests, but interests subject to §363(f)(5).  The 3d Circuit explained that both
types of claims could be reduced to money and the claimants could be compelled
to accept such a money satisfaction in a chapter 7 case.  Id. at 290-91.  If EEOC claims, why not claims under
state franchise laws?