WTO obtains dismissal of claims relating to Chrysler bankruptcy

In re Old Carco (S.D.N.Y. Bankr. 2009)

Wheeler Trigg O'Donnell represented Chrysler Group LLC, the new company that purchased select assets from debtors Chrysler LLC and many of its subsidiaries in the course of their bankruptcy proceedings, in an action against dealers in several states whose dealer agreements with Chrysler Motors LLC n/k/a Old Carco Motors LLC had been rejected in the bankruptcy proceedings.

The rejected dealers sought, under various state dealer statutes, to require Chrysler Group essentially to assume their rejected contracts and otherwise assert claims based on their former status as authorized dealers of Old Carco Motors. On Chrysler Group's request to the Bankruptcy Court that it enforce its prior orders, the Bankruptcy Court ruled in Chrysler Group's favor, holding that the rejected dealers' state court and agency actions were preempted by the Court's prior orders and bankruptcy law and ordered the dealers to dismiss their actions or face substantial monetary sanctions for each day that they continued their violative litigation actions. Each of the offending dealers dismissed their actions.

Obtained voluntary dismissal of all claims by dealers in several states asserting that Chrysler Group LLC, which succeeded Chrysler LLC following its 2009 bankruptcy, was essentially obligated to assume the contracts of dealers that had been rejected by Chrysler LLC during bankruptcy proceedings.