Supreme Court Justice Ruth Bader Ginsburg delayed the Chrysler deal this week. A pension fund group, consumer protection groups and others claim the Chrysler deal violates the Constitution, federal bankruptcy laws and ignores previous bankruptcy decisions. The Obama administration says the Chrysler bailout and protection of our auto industry is crucial to our economy. In forging the Chrysler deal, President Obama is trying to prevent an economic tsunami. We are living in turbulent economic times. Desperate times require desperate measures.
Isn’t that what the Bush Administration said about housing prisoners at Guantanamo Bay. The Bush administration argued our national security demanded new ways of dealing with enemy combatants. So we arrested them, locked them up at Guantanamo and threw away the keys without holding any trials. This was done in the name of national security. Desperate times require desperate measures.
Is changing the laws to prevent an economic tsunami any different than denying basic constitutional rights to prevent another terrorist attack? Is there any real legal difference between the Bush Administration and its treatment at Guantanamo and the Obama administration and its treatment of Chrysler?
The Chrysler deal ignores previous bankruptcy laws. Indiana’s pension fund creditors secured claims were subordinated to non-secure or lesser claims of the Untied Auto Workers. Under federal bankruptcy laws, claims of senior or secured creditors come first. This is not so with Chrysler’s plan.
Previous federal bankruptcy court decisions were ignored in fashioning the deal. Chrysler’s deal wipes out all existing and future claims by those persons injured by asbestos while working with Chrysler brakes. Chrysler also gets a free ride on claims by any persons killed or injured as a result of any defective Chrysler cars or trucks. These persons will be bound to an agreement with no chance to protest. That’s what due process is supposed to protect against.
The usual bankruptcy procedures were abridged to railroad the case through the system. The government argues the Chrysler sale is of national importance. The government claims the bankruptcy may have grave and severe consequences for our country without taking unprecedented action. That was the same thinking in bringing about Guantanamo .
Reinventing the rules does require some further scrutiny by the Supreme Court. Giving these claimants their day in court would be the right thing to do.
Late Tuesday, June 9, the Supreme Court declined to hear the case.