Some thoughts on GM, successor liability, 363 sales, and due process – over at Dealb%k.
Comments
4 responses to “When the Wheels are Spinning Around”
Robert White
It is not so important what the Bankruptcy Court or Circuit Court will say on removal, these issues will be determined in the US Supreme Court, if Executive Benefits hasn’t already.
Robert White
If Executive Benefits affirms that successor liability and fraudulent conveyance actions must be adjudicated outside the bankruptcy court isn’t that new law which in effect renders unconstitutional an old injunction against suing new GM.
The remedy in the GM case is to have the New York District Court re-issue the Injunction, but then it loses its res judicata effect and the focus changes from enforcing the Sale Order and Injunction to adjudicating the successor liability actions.
Statutory mootness is a little more difficult for the GM litigants to overcome but the fraud, concealment of claims, and lack of notice given by GM as pleaded by plaintiffs might prevail over the good faith finality of the sale order and injunction.
But, GM will probably settle and these issues will not be resolved this time around.
Executive Benefits has nothing to do with this issue. That was settled by Travelers Insurance v Bailey, on which the insurer, abetted by Professor Warren, argued that a prior bankruptcy injunction against tort claims is enforceable once the bankruptcy order becomes final. Even jurisdiction cannot be challenged collaterally.
Robert White
In Travelers v Bailey, 129 S. Ct. 2195 (2009) at footnote 6 the Court recognized three exceptions to the absolute bar against a collateral challenge to a final order:
(1) The subject matter of the action was so plainly beyond the court’s jurisdiction that its entertaining the action was a manifest abuse of authority; or
(2) Allowing the judgment to stand would substantially infringe the authority of another tribunal or agency of government; or
(3) The judgment was rendered by a court lacking capability to make an adequately informed determination of a question concerning its own jurisdiction and as a matter of procedural fairness the party seeking to avoid the judgment should have opportunity belatedly to attack the court’s subject matter jurisdiction.
The class action litigants against GM are arguing that GM intentionally concealed their claims and they did not get notice of the sale or plan so the injunction against their lawsuits is invalid for due process reasons.
With a little help from Executive Benefits that seems to implicate every one of the three exceptions to res judicata acknowledged in Travelers v Bailey.
And remember, the protections afforded Travelers were as a contributor to the plan of a debtor that successfully reorganized, not to the third party buyer of all the debtor’s assets who is about to be found to have facilitated a fraudulent conveyance that Executive Benefits will say can not be adjudicated in the Bankruptcy Court.
But even that is not why this case will settle. All meritorious successor lawsuits against New GM will settle to end the public spectacle, ruinous PR, and stain on the Administration.
Or not.
Comments
4 responses to “When the Wheels are Spinning Around”
It is not so important what the Bankruptcy Court or Circuit Court will say on removal, these issues will be determined in the US Supreme Court, if Executive Benefits hasn’t already.
If Executive Benefits affirms that successor liability and fraudulent conveyance actions must be adjudicated outside the bankruptcy court isn’t that new law which in effect renders unconstitutional an old injunction against suing new GM.
The remedy in the GM case is to have the New York District Court re-issue the Injunction, but then it loses its res judicata effect and the focus changes from enforcing the Sale Order and Injunction to adjudicating the successor liability actions.
Statutory mootness is a little more difficult for the GM litigants to overcome but the fraud, concealment of claims, and lack of notice given by GM as pleaded by plaintiffs might prevail over the good faith finality of the sale order and injunction.
But, GM will probably settle and these issues will not be resolved this time around.
Executive Benefits has nothing to do with this issue. That was settled by Travelers Insurance v Bailey, on which the insurer, abetted by Professor Warren, argued that a prior bankruptcy injunction against tort claims is enforceable once the bankruptcy order becomes final. Even jurisdiction cannot be challenged collaterally.
In Travelers v Bailey, 129 S. Ct. 2195 (2009) at footnote 6 the Court recognized three exceptions to the absolute bar against a collateral challenge to a final order:
(1) The subject matter of the action was so plainly beyond the court’s jurisdiction that its entertaining the action was a manifest abuse of authority; or
(2) Allowing the judgment to stand would substantially infringe the authority of another tribunal or agency of government; or
(3) The judgment was rendered by a court lacking capability to make an adequately informed determination of a question concerning its own jurisdiction and as a matter of procedural fairness the party seeking to avoid the judgment should have opportunity belatedly to attack the court’s subject matter jurisdiction.
The class action litigants against GM are arguing that GM intentionally concealed their claims and they did not get notice of the sale or plan so the injunction against their lawsuits is invalid for due process reasons.
With a little help from Executive Benefits that seems to implicate every one of the three exceptions to res judicata acknowledged in Travelers v Bailey.
And remember, the protections afforded Travelers were as a contributor to the plan of a debtor that successfully reorganized, not to the third party buyer of all the debtor’s assets who is about to be found to have facilitated a fraudulent conveyance that Executive Benefits will say can not be adjudicated in the Bankruptcy Court.
But even that is not why this case will settle. All meritorious successor lawsuits against New GM will settle to end the public spectacle, ruinous PR, and stain on the Administration.
Or not.