If you are breathing and can read, you know that Chrysler has filed a Chapter 11 bankruptcy petition.
I am not a bankruptcy lawyer. I am not a corporate lawyer. But the filing has some immediate consequences readily apparent to the reasonably prudent tort lawyer.
1. Pending Cases. All tort cases against Chrysler will be stayed by the filing of the petition. In the short-run, it will bring all action in those cases to a halt, even if suppliers and other defendants are parties to the case. In the coming months, motions will be filed to permit the action to proceed against the non-Chrysler defendants and those issues will have to be sorted out. Cases on appeal will also be stayed for some period of time. People who have unpaid judgments against Chrysler will not be able to collect on those judgments. Plaintiffs who have judgments on appeal secured by surety bonds will be able to collect from the surety bond issuer if they are successful on appeal, but the appeal will be stayed in the short-run. Plaintiffs who have judgments on appeal that are not secured by a surety bond will be general, unsecured creditors if they are successful on appeal. Some effort will be made to have some money set aside from Chrysler’s assets to pay pending judgments and pending claims. How much will be paid on the dollar value of those judgments and claims? By what process will the valuation of the pending claims be determined? All of that remains to be seen. Some of you may ask: Chrysler has liability insurance, doesn’t it? Yes, but the self-insured retention is very high.