Attorneys for Chrysler Group LLC : :

Transcription

1 Hearing Date and Time: January 21, 2010 at 10:00 a.m., E.T. Objection Deadline: January 11, 2010 at 4:00 p.m., E.T. JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) Corinne Ball Veerle Roovers JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) David G. Heiman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) Jeffrey B. Ellman WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Robert D. Cultice WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) Mark T. Clouatre Gwen J. Young Attorneys for Chrysler Group LLC Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : : Old Carco LLC : (f/k/a Chrysler LLC), et al., 1 : : Debtors. : : x Chapter 11 Case No (AJG) (Jointly Administered) NOTICE OF HEARING ON SECOND JOINT MOTION OF DEBTORS AND DEBTORS IN POSSESSION AND CHRYSLER GROUP LLC, PURSUANT TO SECTIONS 105, 362, 363 AND 365 OF THE BANKRUPTCY CODE, FOR AN ORDER ENFORCING AUTOMATIC STAY AND PROVISIONS OF (A) ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN 1 A second amended list of the Debtors, their addresses and tax identification numbers is located on the docket for Case No (AJG) (Docket No. 3945) and can also be found at NYI v1

2 EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION THEREWITH AND RELATED PROCEDURES AND (III) GRANTING RELATED RELIEF; AND (B) ORDER, PURSUANT TO SECTIONS 105 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF PLEASE TAKE NOTICE OF THE FOLLOWING: 1. A hearing to consider the Second Joint Motion of Debtors and Debtors in Possession and Chrysler Group LLC, Pursuant to Sections 105, 362, 363 and 365 of the Bankruptcy Code, for an Order Enforcing Automatic Stay and Provisions of (A) Order (I) Authorizing the Sale of Substantially All of the Debtors Assets Free and Clear of All Liens, Claims, Interests and Encumbrances, (II) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith and Related Procedures and (III) Granting Related Relief; and (B) Order, Pursuant to Sections 105 and 365 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases With Certain Domestic Dealers and (B) Granting Certain Related Relief (the "Motion"), filed jointly by above-captioned debtors and debtors in possession (collectively, the "Debtors") and Chrysler Group LLC ("New Chrysler"), shall be held before the Honorable Arthur J. Gonzalez, United States Bankruptcy Judge, in Room 523 of the United States Bankruptcy Court, Alexander Hamilton Custom House, One Bowling Green, New York, New York 10004, on January 21, 2010, at 10:00 a.m. (New York time). 2. Objections, if any, to the relief sought in the Motion must be made in writing, with a hard copy to Chambers, conform to the Federal Rules of Bankruptcy Procedure and the Local Rules for the United States Bankruptcy Court for the Southern District of New York and be filed with the Bankruptcy Court and must be served in accordance with the Administrative Order, Pursuant to Bankruptcy Rule 1015(c), Establishing Case Management and NYI v1-2-

3 Scheduling Procedures (Docket No. 661) (the "Case Management Order") so as to be actually received by the parties on the Special Service List (as defined in the Case Management Order) not later than 4:00 p.m. (New York time) on January 11, 2010 (the "Objection Deadline"). 3. If no objections are timely filed and served with respect to the Motion, the Debtors and New Chrysler may, on or after the Objection Deadline, submit to the Court an order substantially in the form attached to the Motion, which order shall be submitted and may be entered with no further notice or opportunity to be heard offered to any party. 4. Copies of the Motion, the Case Management Order and the Special Service List (as defined in the Case Management Order) may be obtained from the Court's website at or, free of charge, at NYI v1-3-

4 Dated: December 30, 2009 New York, New York Respectfully submitted, /s/ Corinne Ball Corinne Ball Veerle Roovers JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) David G. Heiman JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Jeffrey B. Ellman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION NYI v1-4-

5 /s/ Robert D. Cultice Robert D. Cultice WILMER CUTLER PICKERING HALE AND DOOR LLP 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Mark T. Clouatre Gwen J. Young WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) ATTORNEYS FOR CHRYSLER GROUP LLC NYI v1-5-

6 Hearing Date and Time: January 21, 2010 at 10:00 a.m., E.T. Objection Deadline: January 11, 2010 at 4:00 p.m., E.T. JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) Corinne Ball Veerle Roovers JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) David G. Heiman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) Jeffrey B. Ellman WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Robert D. Cultice WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) Mark T. Clouatre Gwen J. Young Attorneys for Chrysler Group LLC Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re Old Carco LLC (f/k/a Chrysler LLC), et al., Debtors. : : : : : : : Chapter 11 Case No (AJG) (Jointly Administered) x SECOND JOINT MOTION OF DEBTORS AND DEBTORS IN POSSESSION AND CHRYSLER GROUP LLC, PURSUANT TO SECTIONS 105, 362, 363 AND 365 OF THE BANKRUPTCY CODE, FOR AN ORDER ENFORCING AUTOMATIC STAY AND PROVISIONS OF (A) ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS ASSETS FREE WAI v4

7 AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION THEREWITH AND RELATED PROCEDURES AND (III) GRANTING RELATED RELIEF; AND (B) ORDER, PURSUANT TO SECTIONS 105 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF TO THE HONORABLE ARTHUR J. GONZALEZ, UNITED STATES BANKRUPTCY JUDGE: Old Carco LLC f/k/a Chrysler LLC ("Old Carco") and its affiliated debtors and debtors in possession (collectively with Old Carco, the "Debtors") and Chrysler Group LLC f/k/a New CarCo Acquisition LLC ("New Chrysler") respectfully represent as follows: Background General 1. On April 30, 2009 (the "Petition Date"), Old Carco and 24 of its affiliated Debtors commenced their bankruptcy cases by filing voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). On May 19, 2009, Debtor Alpha Holding LP commenced its bankruptcy case by filing a voluntary petition under chapter 11 of the Bankruptcy Code. By orders of the Court (Docket Nos. 97 and 2188), the Debtors' chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered. 2. The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. WAI v4-2-

8 3. On May 5, 2009, the Office of the United States Trustee for the Southern District of New York appointed an official committee of unsecured creditors, pursuant to section 1102 of the Bankruptcy Code. 4. As of the Petition Date, the Debtors and their nondebtor direct and indirect subsidiaries (collectively, the "Old Carco Companies") comprised one of the world's largest manufacturers and distributors of automobiles and other vehicles, together with related parts and accessories. On the Petition Date, the Old Carco Companies employed approximately 55,000 hourly and salaried employees worldwide, 70% of whom were based in the United States. 5. For the 12 months ended December 31, 2008, the Old Carco Companies recorded revenue of more than $48.4 billion and had assets of approximately $39.3 billion and liabilities totaling $55.2 billion. The Fiat Transaction 6. In connection with the commencement of these cases, Old Carco and its Debtor subsidiaries, Fiat S.p.A. ("Fiat") and New Chrysler entered into a Master Transaction Agreement dated as of April 30, 2009 (as amended and collectively with other ancillary and supporting documents, the "Purchase Agreement"). The Purchase Agreement provided, among other things, that: (a) Old Carco would transfer the majority of its operating assets to New Chrysler, a newly established Delaware limited liability company formed by Fiat; and (b) in exchange for those assets, New Chrysler would assume certain of the Debtors' liabilities and pay to Old Carco $2 billion in cash (collectively with the other transactions contemplated by the Purchase Agreement, the "Fiat Transaction"). 7. On May 31, 2009, this Court issued: (a) an Opinion Granting the Debtors' Motion Seeking Authority to Sell, Pursuant to 363, Substantially All of the Debtors' Assets WAI v4-3-

9 (Docket No. 3073) (the "Sale Opinion"); 1 and (b) an Opinion and Order Regarding Emergency Economic Stabilization Act of 2008 and Troubled Asset Relief Program (Docket Nos and 3229). On June 1, 2009 and consistent with the Sale Opinion, this Court entered an Order authorizing the Fiat Transaction (Docket No. 3232) (the "Sale Order"). Consistent with the Sale Order, the Fiat Transaction was consummated on June 10, 2009 (the "Closing Date"). The Dealership Rejection Motion 8. On May 14, 2009, the Debtors filed their Omnibus Motion of Debtors and Debtors in Possession for an Order, Pursuant to Sections 105, 365 and 525 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 780) (the "Rejection Motion"). By the Rejection Motion, the Debtors sought to reject numerous dealership agreements that would not be assigned to New Chrysler as part of the Fiat Transaction. On June 9, 2009, the Court entered its Order, Pursuant to Sections 105 and 365 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 3802) (the "Rejection Order"). On June 19, 2009, the Bankruptcy Court issued its Opinion Regarding Authorization of Rejection of All Executory Contracts and Unexpired Leases with Certain Domestic Dealers and Granting Certain Related Relief (Docket No. 4145), which set forth the Court's grounds for entering the Rejection Order. See In re Old Carco LLC (f/k/a Chrysler LLC), 406 B.R. 180, 188 (Bankr. S.D.N.Y. 2009) (the "Rejection Opinion"). 1 See In re Chrysler LLC, 405 B.R. 84, 88 (Bankr. S.D.N.Y.), aff d, Ind. State Police Pension Trust v. Chrysler LLC (In re Chrysler LLC), 576 F.3d 108 (2d Cir.), vacated as moot, 78 USLW 3107 (Dec. 14, 2009). WAI v4-4-

10 The Prior Enforcement Motion and Opinion 9. On August 13, 2009, the Debtors and New Chrysler jointly filed a motion seeking an order enforcing (a) the protections of the automatic stay; (b) the free and clear provisions of the Sale Order; (c) the enforcement provisions of the Sale Order; and (d) the provisions of the Rejection Order, in each case to enjoin the pursuit of certain litigation by a group of rejected dealers in violation of this Court's orders, including the award of contempt damages against the noncompliant dealers for the costs incurred by the Debtors and New Chrysler (Docket No. 5162) (the "Prior Enforcement Motion"). On August 25, 2009, the Debtors and New Chrysler filed a reply brief in further support of the Prior Enforcement Motion (Docket No. 5303) (together with the Prior Enforcement Motion, the "Prior Enforcement Briefs"). 10. On August 31, 2009, the Court issued its Opinion and Order granting the Prior Enforcement Motion, in material part (Docket No. 5372) (the "Enforcement Opinion"). By the Enforcement Opinion, the Court granted injunctive relief to the Debtors and New Chrysler that, among other things, required each of the noncompliant dealers to withdraw its state actions initiated in violation of the Sale Order and the Rejection Order by September 10, 2009 or face sanctions of $10,000 per day. The Court further made clear that "the Dealers are enjoined from pursuing any future action against New Chrysler with respect to any rejected dealer agreements." Enforcement Opinion at 10. In the Enforcement Opinion, the Court indicated that the issue of sanctions against the dealers for violations of the Sale Order and the Rejection Order would be addressed by a separate opinion and order (the "Additional Sanctions Order"), which has yet to be issued. WAI v4-5-

11 The Plan 11. On December 14, 2009 and December 15, 2009, the Debtors filed: (a) the Joint Plan of Liquidation of Debtors and Debtors in Possession, dated December 14, 2009 (Docket No. 6077); (b) the Disclosure Statement with Respect to the Joint Plan of Liquidation of Debtors and Debtors in Possession, dated December 14, 2009 (Docket No. 6078) (as it may be amended or modified, the "Disclosure Statement"); and (c) the Motion of Debtors and Debtors in Possession for an Order (I) Approving Disclosure Statement, (II) Establishing Procedures for Solicitation and Tabulation of Votes to Accept or Reject Joint Plan of Liquidation, (III) Scheduling Hearing on Confirmation of Joint Plan of Liquidation and (IV) Approving Related Notice Procedures (Docket No. 6079) (the "Solicitation Procedures Motion"). The hearing to consider the relief requested in the Solicitation Procedures Motion, including approval of the Disclosure Statement, currently is scheduled for January 21, Jurisdiction 12. This Court has subject matter jurisdiction to consider this matter pursuant to 28 U.S.C This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C and Relief Requested 13. Pursuant to sections 105, 362, 363 and 365 of the Bankruptcy Code and Rule 9020 of the Federal Rules of Bankruptcy Procedure, and as further described below, the Debtors and New Chrysler hereby seek the entry of an order enforcing (a) the protections of the automatic stay; (b) the free and clear provisions of the Sale Order; (c) the enforcement provisions of the Sale Order; and (d) the provisions of the Rejection Order, in each case to enjoin litigation by the Noncompliant Dealers (as defined below) in violation of this Court's orders, including the award of contempt damages against the Noncompliant Dealers for the costs and attorneys' fees WAI v4-6-

12 incurred by the Debtors and New Chrysler in bringing this Motion and responding to the litigation that the Noncompliant Dealers have brought in other forums. Facts Relevant to This Motion Sale, Rejection and Enforcement Proceedings 14. In its Sale Order and Rejection Order and its various accompanying opinions, the Court expressly barred any rejected dealer from pursuing any action against New Chrysler under state dealer laws based on such dealer's prior status as an authorized dealer of the Debtors. This Court previously (and repeatedly) has recognized that this is the plain impact of the terms of the Sale Order, the Sale Opinion, the Rejection Order and the Rejection Opinion. See Enforcement Opinion; Opinion and Order Denying Dealers' Motion for an Order Certifying Immediate Appeal to the United States Court of Appeal for the Second Circuit (Oct. 16, 2009) (Docket No. 5766). In addition to the terms of the Court's prior opinions, the grounds for the foregoing conclusion are explained in further detail in the Debtors' and New Chrysler's Prior Enforcement Briefs, which are attached hereto collectively as Exhibit A and are incorporated herein by reference. In the interests of efficiency, the Debtors and New Chrysler will not reiterate in this Motion all of the arguments in the Prior Enforcement Briefs, which apply with equal weight to the relief sought herein. 15. Under the circumstances, it has been firmly and unequivocally established that the rejected dealers are barred from burdening New Chrysler in any manner based on the dealers' rejected contracts and are enjoined from pursuing any state law remedies against New Chrysler based on these rejected agreements. For example, in the Enforcement Opinion, the Court applied its earlier Orders and Opinions by (a) ordering certain rejected dealers to withdraw pending actions in state courts and administrative bodies, or face daily sanctions of $10,000 for WAI v4-7-

13 noncompliance, and (b) enjoining them "from pursuing any future action against New Chrysler with respect to any rejected dealer agreements." Enforcement Opinion at 10. The Court also indicated the broader applicability of this interpretation to cover the entire rejected dealer body by directing the Debtors to serve the Enforcement Opinion "upon all of the rejected dealers." Id. at Despite the clear prior rulings of this Court on numerous occasions, certain rejected dealers continue to violate the terms of the Sale Order and the Rejection Order by pursuing rights against New Chrysler based on the rejected dealer agreements. By this Motion, the Debtors and New Chrysler seek, once again, to enforce the Courts' prior Orders and Opinions to prevent the improper conduct of these noncompliant dealers. Painter's Sun Country Chrysler, Inc. Protest 17. Painter's Sun Country Chrysler, Inc. ("Painter's Sun") is one of the rejected dealers and thus falls squarely within the group of dealers barred from pursuing any action against New Chrysler under state dealer laws based on their former status as Old Carco's dealers. Indeed, Painter's Sun was among the group of rejected dealers who previously filed state proceedings in a failed effort to remain a Chrysler dealer notwithstanding that their agreements had been rejected and not assigned to New Chrysler. Painter's Sun had sought from the Utah Motor Vehicle Franchise Advisory Board (the "Utah Board") an adjudicative proceeding "to review the proposed transfer of three Franchises previously held by Protestor to Stephen Wade" and a determination "that the Franchisor has unlawfully terminated the Franchisers." Painter's Sun Protest and Request for Agency Action, dated August 6, 2009, at 2-3 (the "Prior Painter's Sun Protest"). 2 These filings spurred New Chrysler and the Debtors to file the Prior 2 The Prior Painter's Sun Protest is attached as Exhibit F to the Prior Enforcement Motion. WAI v4-8-

14 Enforcement Motion on August 13, 2009, which originally identified Painter's Sun as a noncompliant dealer. Five days after the Prior Enforcement Motion was filed, for unspecified reasons, Painter's Sun withdrew its first protest rather than challenge the motion. 18. Despite the clear import of the Sale Order and the Rejection Orders and supporting Opinions, and despite the Enforcement Opinion that restated these prior rulings, on December 17, 2009, Painter's Sun filed a second protest action with the Utah Board. See Painter's Sun Protest filed December 17, 2009 (attached hereto as Exhibit B) (the "Painter's Sun Protest"). This second protest is styled Painter's Sun Country Chrysler, Inc. v. Chrysler Group LLC and Stephen Wade Auto Centers. In this action, Painter's Sun again requests, under Utah's New Automobile Franchise Act, that the Utah Board stay the issuance of New Chrysler's franchises to Stephen Wade Auto Centers ("Wade"), or to any other entity, pending resolution of an arbitration it is seeking under the recently enacted federal legislation, described below. Painter's Sun Protest at 1-2. Painter's Sun does not identify which section of the Utah dealer statute applies, but because the pleading is styled as a "Protest and Request for Agency Action," the only remotely applicable provision is a right to protest the establishment of a new dealership or outlet under Utah Code Ann (4)(a) (authorizing a franchisee in certain circumstances to "protest to the advisory board the establishment or relocation of the dealership"). 19. In addition to invoking its protest rights under the Utah dealer statute based on its rejected dealership agreement, Painter's Sun purports to justify its request to temporarily block Wade's franchise by citing recently enacted federal legislation signed into law on December 16, See H.R. 3288, section 747 of the Consolidated Appropriations Act of 2010, attached hereto as Exhibit C (the "Federal Legislation"). The Federal Legislation purports WAI v4-9-

15 to provide a defined set of rejected dealers with the right to seek, through binding arbitration (an "Arbitration"), a standard Letter of Intent from New Chrysler to enter its dealer network in the dealer's former markets under certain circumstances, if the rejected dealers decide to pursue Arbitration and then prevail in an Arbitration as provided under this legislation. 3 Painter's Sun does not cite any provision of the new federal law that requires or authorizes a stay. Nor does Painter's Sun offer any argument that would warrant a state tribunal granting the requested stay as a result of the requested Arbitration or otherwise. Cf. Painter's Sun Protest at In response to the Painter's Sun Protest, New Chrysler sent a letter to the Utah Administrative Law Judge responsible for the protest, requesting that the protest be dismissed or, in the alternative, abated during the pendency of this Motion. See Letter from Counsel for New Chrysler dated December 22, 2009, attached hereto as Exhibit D. In this letter, New Chrysler clearly stated that it would file this Motion quickly, and suggested that any party or entity that furthers the Painter's Sun Protest might be held in contempt of this Court's prior Orders and Opinions. See id. at 10. Despite the clear delineation of the potential impact of this Court's prior Orders and Opinions on the Painter's Sun Protest, Painter's Sun has not agreed to dismiss or abate its most recent protest. 21. Painter's Sun also has asked the Utah Tax Commission, with no apparent authority or precedent, to "revoke[] and stay[]" the issuance of any license to Wade pending its protest against New Chrysler. See Letter from Counsel for Painter's Sun dated December 24, 2009, attached hereto as Exhibit E. 3 Although the validity of this Federal Legislation is not at issue here, neither the Debtors nor New Chrysler waive or otherwise relinquish their right to challenge this legislation in the future, including its constitutionality. WAI v4-10-

16 Cutrubus Motors, Inc.'s and Layton Dodge, Inc.'s Protest 22. Like Painter's Sun, Cutrubus Motors, Inc. d/b/a Rocky Mountain Chrysler- Jeep and Layton Dodge, Inc. d/b/a Cutrubus Chrysler Jeep Dodge (collectively, "Cutrubus") are rejected dealers and thus fall squarely within the group of dealers barred from pursuing any action against New Chrysler under state dealer laws based on their former status as Old Carco's dealers. 23. Despite the clear import of the Sale Order and the Rejection Orders and supporting Opinions, and despite the Enforcement Opinion that restated these prior rulings, Cutrubus recently filed a protest action with the Utah Board. See Cutrubus Protest filed December 23, 2009 (attached hereto as Exhibit F) (the "Cutrubus Protest" and, together with the Painter's Sun Protest, the "Protests"). In its protest, Cutrubus asks the Utah Board "to stay the issuance and/or registration of any [New Chrysler] franchise in the Ogden and Layton areas...." pending resolution of an arbitration it is seeking under the recently enacted federal legislation. Id.at 5. Like Painter's Sun, Cutrubus fails to identify which section of the Utah dealer statute applies, but because the pleading is styled as a "Protest and Request for Agency Action," the only remotely applicable provision is a right to protest the establishment of a new dealership or outlet under Utah Code Ann (4)(a) (authorizing a franchisee in certain circumstances to "protest to the advisory board the establishment or relocation of the dealership"). 24. In addition to invoking its purported protest rights under the Utah dealer statute, Cutrubus purports to justify its request to temporarily block the establishment of any franchise by citing the Federal Legislation. As with Painter's Sun, Cutrubus does not cite any provision of the new federal law that requires or authorizes a stay, nor does Cutrubus offer any WAI v4-11-

17 argument that would warrant a state tribunal granting the requested stay as a result of the requested Arbitration or otherwise. Cf. id. at 4-5. The Protests Clearly Violate the Court's Prior Rulings and Must Be Enjoined 25. In clear and direct contravention of this Court's prior rulings, Painter's Sun and Cutrubus (collectively, the "Noncompliant Dealers") are pursuing actions against New Chrysler with respect to their rejected dealer agreements, seeking to block New Chrysler from establishing new dealerships. The new Federal Legislation does not authorize any such action or grant the Noncompliant Dealers any relief from the Court's prior Orders. The Federal Legislation provides only for a right to seek an Arbitration and the possibility, if the Arbitration is successful, that the dealer may obtain a Letter of Intent for a new dealership in its former market under certain circumstances. The new law provides neither a right nor a mechanism for rejected dealers to stay the issuance of a new franchise under state dealer laws while an Arbitration is pending or requested. Moreover, the Federal Legislation in no way enjoins New Chrysler from adding new dealerships or new lines to assumed dealers or limits its actions to complete its network restructuring plans. Nor does the Federal Legislation resurrect rejected dealers' state law protest rights. The Noncompliant Dealers do not claim otherwise in their Protests. 26. As such, it cannot be legitimately disputed that the Noncompliant Dealers remain entirely subject to the Sale Order and the Rejection Orders and the supporting Opinions. As this Court already has held and explained in the Enforcement Opinion, the Sale Order and the Rejection Order prohibit rejected dealers from taking any action against New Chrysler with regard to state dealer laws or otherwise as a result of their status as former dealers of Old Carco, including by pursing the "blocking rights" that the Noncompliant Dealers invoke in their current Protests. Yet, the Noncompliant Dealers ignore the Court's prior admonitions and continue to WAI v4-12-

18 pursue the Protests in an effort to thwart New Chrysler's implementation of its business plans for its dealership network. The Noncompliant Dealers have brazenly initiated adversarial actions for this purpose, each styled as a "Protest and Request for Agency Action," and based these actions on their alleged rights as former dealers under Utah's New Automobile Franchise Act. See Painter's Sun Protest at 1-2 (citing Utah Code Ann et seq., see Utah Code Ann (4)(a), which sets out dealers' protest rights), and Cutrubus Protest at 1-2. This Court already has ordered all rejected dealers to cease and desist from opposing New Chrysler's actions before state franchise boards. By pursuing the Protests, the Noncompliant Dealers plainly are refusing to comply with the clear orders of this Court. 27. With respect to Painter's Sun, this is the second clear violation of the Court's orders. Painter's Sun thus is engaged in a pattern of behavior that attempts to interpret the numerous orders entered in these bankruptcy case in a manner that it believes entitles it to pursue state law-based relief against New Chrysler the very type of relief that this Court previously enjoined. It is clear that that absent intervention by this Court, Painter's Sun likely will continue to pursue a course of conduct that violates this Court's multiple rulings. Similarly, Cutrubus is engaging in conduct in violation of this Court's prior Orders and Opinions despite having been served with all of these papers. It appears likely that Cutrubus will not cease and desist from this improper conduct without the further intervention of the Court. 28. For all of the reasons set forth herein and in the Prior Enforcement Briefs, New Chrysler and the Debtors therefore once again move this Court to issue an enforcement order (a) requiring the Noncompliant Dealers to withdraw their Protests within five days of the entry of an order granting this Motion or face a sanction of $10,000 for each day of noncompliance, and (b) enjoining the Noncompliant Dealers from pursuing any further action in WAI v4-13-

19 any forum against New Chrysler based on its prior status as Old Carco's dealer, with the single exception of the Arbitration provided for under the Federal Legislation, the legality and propriety of which is not at issue herein. The Debtors and New Chrysler further request that the Noncompliant Dealers be subject to any relief granted to the Debtors and New Chrysler in the Additional Sanctions Order. Notice 29. No trustee or examiner has been appointed in these chapter 11 cases. In accordance with the Administrative Order, Pursuant to Bankruptcy Rule 1015(c), Establishing Case Management and Scheduling Procedures (Docket No. 661) (the "Case Management Order"), entered on May 12, 2009, notice of this Motion has been given to (a) the parties identified on the General Service List and the Special Service List (as such terms are identified in the Case Management Order); and (b) counsel to Painter's Sun and Cutrubus. The Debtors and New Chrysler submit that no other or further notice need be provided. Prior Request 30. No prior request for the relief sought in this Motion has been made to this or any other Court, except that the Debtors and New Chrysler previously sought identical relief against Painter's Sun in the Prior Enforcement Motion as a result of the Prior Painter's Sun Protest (which protest was withdrawn without further Court intervention prior to the hearing on the Prior Enforcement Motion). See, supra, paragraph 17. WAI v4-14-

20 WHEREFORE, the Debtors and New Chrysler respectfully request that this Court: (i) enter an order substantially in the form attached hereto as Exhibit G, granting the relief sought herein; and (ii) grant such other and further relief to the Debtors and New Chrysler as the Court may deem proper. Dated: December 30, 2009 New York, New York Respectfully submitted, /s/ Corinne Ball Corinne Ball Veerle Roovers JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) David G. Heiman JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Jeffrey B. Ellman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION WAI v4-15-

21 /s/ Robert D. Cultice Robert D. Cultice WILMER CUTLER PICKERING HALE AND DOOR LLP 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Mark T. Clouatre Gwen J. Young WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) ATTORNEYS FOR CHRYSLER GROUP LLC WAI v4-16-

22 EXHIBIT A [Prior Enforcement Briefs] WAI v4

23 JONES DAY WILMERHALE 222 East 41st Street 60 State Street New York, New York Boston, Massachusetts Telephone: (212) Telephone: (617) Facsimile: (212) Facsimile: (617) Corinne Ball Robert D. Cultice Veerle Roovers WHEELER TRIGG O'DONNELL LLP JONES DAY 1801 California Street, Suite 3600 North Point Denver, Colorado Lakeside Avenue Telephone: Cleveland, Ohio Facsimile: Telephone: (216) Mark T. Clouarte Facsimile: (216) Gwen J. Young David G. Heiman Attorneys for Chrysler Group LLC JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) Jeffrey B. Ellman Attorneys for Debtors and Debtors in Possession Hearing Date and Time: August 27, 2009 at 10:00 a.m., E.T. Objection Deadline: August 24, 2009 at 12:00 p.m., E.T. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : : Old Carco LLC : (f/k/a Chrysler LLC), et al., : : Debtors. : : x Chapter 11 Case No (AJG) (Jointly Administered) NOTICE OF HEARING ON JOINT MOTION OF DEBTORS AND DEBTORS IN POSSESSION AND CHRYSLER GROUP LLC, PURSUANT TO SECTIONS 105, 362, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9020, FOR AN ORDER ENFORCING AUTOMATIC STAY AND PROVISIONS OF (A) ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION NYI v1

24 THEREWITH AND RELATED PROCEDURES AND (III) GRANTING RELATED RELIEF; AND (B) ORDER, PURSUANT TO SECTIONS 105 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF PLEASE TAKE NOTICE OF THE FOLLOWING: 1. A hearing to consider the Joint Motion of Debtors and Debtors in Possession and Chrysler Group LLC, Pursuant to Sections 105, 362, 363 and 365 of the Bankruptcy Code and Bankruptcy Rule 9020, for an Order Enforcing Automatic Stay and Provisions of (A) Order (I) Authorizing the Sale of Substantially All of the Debtors Assets Free and Clear of All Liens, Claims, Interests and Encumbrances, (II) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith and Related Procedures and (III) Granting Related Relief; and (B) Order, Pursuant to Sections 105 and 365 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (the "Motion"), jointly filed by the above-captioned debtors and debtors in possession and Chrysler Group LLC (collectively, the "Movants"), shall be held before the Honorable Arthur J. Gonzalez, United States Bankruptcy Judge, in Room 523 of the United States Bankruptcy Court, Alexander Hamilton Custom House, One Bowling Green, New York, New York 10004, on August 27, 2009, at 10:00 a.m. (New York time). 2. Objections, if any, to the relief sought in the Motion must be made in writing, with a hard copy to Chambers, conform to the Federal Rules of Bankruptcy Procedure and the Local Rules for the United States Bankruptcy Court for the Southern District of New York and be filed with the Bankruptcy Court and must be served in accordance with the Administrative Order, Pursuant to Bankruptcy Rule 1015(c), Establishing Case Management and Scheduling Procedures (Docket No. 661) (the "Case Management Order"), so as to be actually NYI v1-2-

25 received by the parties on the Special Service List (as defined in the Case Management Order) affected not later than 12:00 p.m. (New York time) on August 24, 2009 (the "Objection Deadline"). 3. If no objections are timely filed and served with respect to the Motion, the Movants may, on or after the Objection Deadline, submit to the Court an order substantially in the form attached to the Motion, which order shall be submitted and may be entered with no further notice or opportunity to be heard offered to any party. NYI v1-3-

26 4. Copies of the Motion, the Case Management Order and the Special Service List may be obtained from the Court's website at or, free of charge, at Dated: August 13, 2009 New York, New York Respectfully submitted, /s/ Corinne Ball Corinne Ball Veerle Roovers JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) David G. Heiman JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Jeffrey B. Ellman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION NYI v1-4-

27 /s/ Robert D. Cultice Robert D. Cultice WILMERHALE 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Mark T. Clouarte Gwen J. Young WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) ATTORNEYS FOR CHRYSLER GROUP LLC NYI v1-5-

28 JONES DAY WILMERHALE 222 East 41st Street 60 State Street New York, New York Boston, Massachusetts Telephone: (212) Telephone: (617) Facsimile: (212) Facsimile: (617) Corinne Ball Robert D. Cultice Veerle Roovers WHEELER TRIGG O'DONNELL LLP JONES DAY 1801 California Street, Suite 3600 North Point Denver, Colorado Lakeside Avenue Telephone: Cleveland, Ohio Facsimile: Telephone: (216) Mark T. Clouarte Facsimile: (216) Gwen J. Young David G. Heiman Attorneys for Chrysler Group LLC JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) Jeffrey B. Ellman Attorneys for Debtors and Debtors in Possession Hearing Date and Time: August 27, 2009 at 10:00 a.m., E.T. Objection Deadline: August 24, 2009 at 12:00 p.m., E.T. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : : Old Carco LLC : (f/k/a Chrysler LLC), et al., : : Debtors. : : x Chapter 11 Case No (AJG) (Jointly Administered) JOINT MOTION OF DEBTORS AND DEBTORS IN POSSESSION AND CHRYSLER GROUP LLC, PURSUANT TO SECTIONS 105, 362, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9020, FOR AN ORDER ENFORCING AUTOMATIC STAY AND PROVISIONS OF (A) ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION THEREWITH AND RELATED PROCEDURES AND (III) GRANTING RELATED ATI v3

29 RELIEF; AND (B) ORDER, PURSUANT TO SECTIONS 105 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF TO THE HONORABLE ARTHUR J. GONZALEZ, UNITED STATES BANKRUPTCY JUDGE: Old Carco LLC f/k/a Chrysler LLC ("Old Carco") and its affiliated debtors and debtors in possession (collectively with Old Carco, the "Debtors") and Chrysler Group LLC f/k/a New CarCo Acquisition LLC ("New Chrysler") respectfully represent as follows: General Background 1. On April 30, 2009 (the "Petition Date"), Old Carco and 24 of its affiliated Debtors (collectively, the "Original Debtors") commenced their reorganization cases by filing voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). On May 19, 2009, Debtor Alpha Holding LP commenced its reorganization case by filing a voluntary petition under chapter 11 of the Bankruptcy Code. By orders of the Court (Docket Nos. 97 and 2188), the Debtors' chapter 11 cases have been consolidated for procedural purposes only and are being administered jointly. 2. The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 3. On May 5, 2009, the Office of the United States Trustee for the Southern District of New York appointed an official committee of unsecured creditors, pursuant to section 1102 of the Bankruptcy Code. 4. As of the Petition Date, the Debtors and their nondebtor direct and indirect subsidiaries (collectively, the "Old Carco Companies") comprised one of the world's largest ATI v3-2-

30 manufacturers and distributors of automobiles and other vehicles, together with related parts and accessories. On the Petition Date, the Old Carco Companies employed approximately 55,000 hourly and salaried employees worldwide, 70% of whom were based in the United States. 5. For the 12 months ended December 31, 2008, the Old Carco Companies recorded revenue of more than $48.4 billion and had assets of approximately $39.3 billion and liabilities totaling $55.2 billion. The Fiat Transaction 6. In connection with the commencement of these cases, Old Carco and its Debtor subsidiaries, Fiat S.p.A. ("Fiat") and New Chrysler entered into a Master Transaction Agreement dated as of April 30, 2009 (as amended and collectively with other ancillary and supporting documents, the "Purchase Agreement"). The Purchase Agreement provided, among other things, that: (a) Old Carco would transfer the majority of its operating assets to New Chrysler, a newly established Delaware limited liability company formed by Fiat; and (b) in exchange for those assets, New Chrysler would assume certain of the Debtors' liabilities and pay to Old Carco $2 billion in cash (collectively with the other transactions contemplated by the Purchase Agreement, the "Fiat Transaction"). On May 3, 2009, the Original Debtors filed a motion to approve the Fiat Transaction or a similar transaction with a competing bidder (Docket No. 190). 7. On May 31, 2009, this Court issued: (a) an Opinion Granting the Debtors' Motion Seeking Authority to Sell, Pursuant to 363, Substantially All of the Debtors' Assets (Docket No. 3073) (the "Sale Opinion"); and (b) an Opinion and Order Regarding Emergency Economic Stabilization Act of 2008 and Troubled Asset Relief Program (Docket Nos and 3229) (together with the Sale Opinion, the "Opinions"). On June 1, 2009 and consistent with the Sale Opinion, this Court entered an Order authorizing the Fiat Transaction (Docket No. 3232) ATI v3-3-

31 (the "Sale Order"). On June 5, 2009, the United States Court of Appeals for the Second Circuit affirmed the Opinions and the Sale Order. Consistent with the Sale Order, the Fiat Transaction was consummated on June 10, 2009 (the "Closing"). The Dealership Rejection Motion 8. On May 14, 2009, the Debtors filed their Omnibus Motion of Debtors and Debtors in Possession for an Order, Pursuant to Sections 105, 365 and 525 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 780) (the "Rejection Motion"). By the Rejection Motion, the Debtors sought to reject numerous dealership agreements that would not be assigned to New Chrysler as part of the Fiat Transaction. On June 9, 2009, the Court entered its Order, Pursuant to Sections 105 and 365 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 3802) (the "Rejection Order"). On June 19, 2009, the Bankruptcy Court issued its Opinion Regarding Authorization of Rejection of All Executory Contracts and Unexpired Leases with Certain Domestic Dealers and Granting Certain Related Relief (Docket No. 4145) (the "Rejection Opinion"), which set forth the Court's grounds for entering the Rejection Order. Jurisdiction 9. This Court has subject matter jurisdiction to consider this matter pursuant to 28 U.S.C This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C and ATI v3-4-

32 Preliminary Statement 10. When the Debtors commenced these bankruptcy cases, they maintained a network of more than 3,000 dealers. As has been repeatedly described in these proceedings, this dealer network was far larger than the Debtors' market share could rationally support and the fragmentation of the dealer network made it difficult for the Debtors to compete. As part of the Fiat Transaction, New Chrysler was only willing to accept part of the Debtors' dealer network and expressly declined to accept the assignment of certain dealer agreements. See Notice of Filing Designation of Excluded Contracts in Connection with Omnibus Motion of Debtors and Debtors in Possession for an Order, Pursuant to Sections 105, 365 and 525 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 3478) at Annex 1. The assumption and assignment of the limited subset of dealer agreements that New Chrysler was willing to accept was approved as part of the Sale Order. The excluded dealer agreements that were not being assumed and assigned to New Chrysler as part of the Fiat Transaction were rejected pursuant to the Rejection Order. 11. As the Court is aware, both the Sale Order and the Rejection Order were heavily litigated prior to their entry. By May 25, 2009, approximately 347 objections were filed to the Fiat Transaction or to the related assumption and assignment of certain executory contracts and unexpired leases. Among the parties that objected to the Fiat Transaction were certain groups of the Debtors' dealers. The Court conducted a three-day evidentiary hearing commencing on May 27, 2009 regarding the Fiat Transaction at which numerous witnesses were presented, including Peter Grady, who was Old Carco's former director of dealer operations. After receiving the testimony and allowing argument from numerous interested parties, including various dealers, the Court issued the Sale Opinion and entered the Sale Order. Similarly, ATI v3-5-

33 approximately 430 dealers objected to the Rejection Motion. After hearing two days of argument and receiving live testimony from numerous witnesses, the Court entered the Rejection Order and subsequently issued the Rejection Opinion After participating in the litigation that gave rise to the Sale Order and the Rejection Order, including filing objections to the Sale Order and the Rejection Order as members of the so-called Committee of Affected Dealers or in their own name, the following dealers have commenced a variety of actions in state courts or administrative bodies that seek, among other things, to force New Chrysler to continue to honor the very dealer agreements that this Court already determined would be rejected rather than assumed and assigned as part of the Fiat Transaction: Boucher Imports, Inc.; Braeger Chrysler Jeep, Inc.; Chilson, Inc.; Crain CDJ, LLC; Quaden Motors, Inc. (a/k/a John Quanden Dodge, Inc.); Johnson Motors of St. Croix Falls, Inc.; Lakeland Pontiac-GMC-Jeep, Inc. (a/k/a Lakeland Oldsmobile-Pontiac-GMC); Mueller Chrysler, Inc.; Wolf's Motor Car Company, Inc.; Spitzer Autoworld Sheffield, LLC; and Painter's Suncountry Chrysler, Inc. (collectively, the "Noncompliant Dealers"). Any determination of the rights of the Noncompliant Dealers against New Chrysler under their rejected dealer agreements in the pending non-bankruptcy actions also could involve determination regarding the rights of the Noncompliant Dealers under these agreements against the Debtors. By taking these actions, the Noncompliant Dealers have directly violated this Court's orders. The Noncompliant Dealers have pursued this course of relief instead of following the procedurally proper course of appealing the Sale Order or the Rejection Order. 13. In essence, the Noncompliant Dealers are seeking to relitigate bankruptcy issues in nonbankruptcy state court and administrative forums in an attempt to end run this 1 Only one pair of affiliated dealers has pursued an appeal of the Rejection Order. See Notice of Appeal (Docket No. 4150). The appeal of Tarbox Motors Inc. and Tarbox Chrysler, LLC is still pending. ATI v3-6-

34 Court's Orders and to "undo" certain aspects of the Fiat Transaction that this Court approved, rather than appeal the Sale Order and the Rejection Order in federal court. These actions constitute an intentional and brazen attack on this Court's jurisdiction and authority. As discussed in detail below, the Noncompliant Dealers' filing of state court lawsuits and administrative actions in violation of the automatic stay and the previous orders of this Court should not be permitted to stand, and this Court must take immediate action to stop this attempt to subvert the powers of this Court. Relief Requested 14. Pursuant to sections 105, 362, 363 and 365 of the Bankruptcy Code and Rule 9020 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), the Debtors and New Chrysler hereby seek the entry of an order enforcing (a) the protections of the automatic stay; (b) the free and clear provisions of the Sale Order; (c) the enforcement provisions of the Sale Order; and (d) the provisions of the Rejection Order, in each case to stop the pursuit of certain litigation by the Noncompliant Dealers in violation of this Court's orders, including the award of contempt damages against the Noncompliant Dealers for the costs incurred by the Debtors and New Chrysler in bringing this Motion and responding to the litigation that the Noncompliant Dealers have brought in other forums. Relevant Provisions of this Court's Prior Orders and Opinions Relevant Provisions of the Sale Opinion and the Sale Order 15. In the Sale Opinion, this Court held that "[i]n every bankruptcy case involving the sale of substantially all of a debtor's assets, a purchaser may decide to assume certain contracts but not others." The Court stated: Here, as part of the economic valuation of the transaction, [New Chrysler] indicated which of the Debtors' contracts it considered valuable to its future venture and directed that those be assumed ATI v3-7-

35 and assigned to it. Obviously, the value that [New Chrysler] would agree to pay for the assets has to be impacted by the inclusion or exclusion of certain contracts. Fair value has been paid for the assets to be transferred. The purchaser has made a business decision as to which contracts it desires to assume. Sale Opinion at pp This Court held that "the assets in the Fiat Transaction are sold free and clear of liens, claims, interests, and encumbrances pursuant to section 363(f); and the protections of a good faith purchaser pursuant to section 363(m) shall apply." Sale Opinion at p On June 1, 2009, and consistent with the Sale Opinion, this Court entered the Sale Order authorizing the Fiat Transaction subject to multiple terms and conditions. The Sale Order stated: The Debtors may sell the Purchased Assets free and clear of all Claims because, in each case where a Claim is not an Assumed Liability, one or more of the standards set forth in section 363(f)(1)-(5) of the Bankruptcy Code have been satisfied. Except as provided in this Sale Order, the assumption and assignment of each of the Assumed Agreements is also free and clear of all Claims other than the payment of the Cure Costs. Sale Order at W, p. 17. The "Purchased Assets" under the Purchase Agreement and the Sale Order include the assumed and assigned dealer agreements. See Sale Order at Introduction, p This Court reasoned that New Chrysler's ability to acquire the Debtors' assets (including designated dealer agreements) free and clear of all claims other than those specifically assumed as part of the Fiat Transaction was critical to the Fiat Transaction: [New Chrysler] would not have entered into the Purchase Agreement and would not consummate the Sale Transaction, thus adversely affecting the Debtors, their estates, creditors, employees, retirees and other parties in interest if the sale of the Purchased Assets was not free and clear of all Claims other than Assumed Liabilities, or if [New Chrysler] would, or in the future could, be liable for any such Claims, including, without limitation and as applicable, certain liabilities (collectively, the "Excluded Liabilities") that expressly are not assumed by [New Chrysler], as ATI v3-8-

36 Sale Order at AA, p. 19. set forth in the Purchase Agreement or in this Sale Order. [New Chrysler] asserts that it will not consummate the Sale Transaction unless the Purchase Agreement specifically provides and this Court specifically orders that none of [New Chrysler], its affiliates, their present or contemplated members or shareholders (other than the Debtors as the holder of equity in [New Chrysler]), or the Purchased Assets will have any liability whatsoever with respect to, or be required to satisfy in any manner, whether at law or in equity, whether by payment, setoff or otherwise, directly or indirectly, (a) any Claim other than (x) an Assumed Liability or (y) a Claim against any "Purchased Company" (as such term is defined in the Purchase Agreement) or (b) any successor liability for any of the Debtors. 18. This Court specifically held that the dealers' objections were overruled and that, because the standards of section 363(f) of the Bankruptcy Code were satisfied, New Chrysler assumed dealer agreements free and clear of all claims by those dealers whose agreements were rejected. Sale Order at pp In particular, the Sale Order stated: Sale Order at Z, p. 18. The transfer of the Purchased Assets [e.g., including the assumed dealer agreements] to the [New Chrysler] under the Purchase Agreement will be a legal, valid and effective transfer of all of the legal, equitable and beneficial right, title and interest in and to the Purchased Assets free and clear of all Claims that are not Assumed Liabilities (including, specifically and without limitation, any products liability claims, environmental liabilities, employee benefit plans and any successor liability claims), except as otherwise provided in this Sale Order. 19. Under paragraph 9 of the Sale Order, the assets purchased by New Chrysler under the Purchase Agreement "shall be free and clear of all Claims except for Assumed Liabilities." Paragraph 12 of the Sale Order helped implement this transfer free and clear by providing as follows: Except as otherwise provided in the Purchase Agreement, all persons and entities (and their respective successors and assigns), including, but not limited to, all debt security holders, equity ATI v3-9-

37 security holders, affiliates, governmental, tax and regulatory authorities, lenders, customers, dealers, employees, trade creditors, litigation claimants and other creditors, holding Claims (whether legal or equitable, secured or unsecured, known or unknown, matured or unmatured, contingent or non-contingent, liquidated or unliquidated, senior or subordinated) except for Assumed Liabilities or Claims against any Purchased Company, arising under or out of, in connection with, or in any way relating to, the Debtors, the Purchased Assets, the operation of the Business prior to Closing or the transfer of the Purchased Assets to [New Chrysler], are hereby forever barred, estopped and permanently enjoined from asserting such Claims against [New Chrysler], its successors or assigns, its property or the Purchased Assets. No such persons or entities shall assert against [New Chrysler] or their successors in interest any Claim arising from, related to or in connection with the ownership, sale or operation of any Asset prior to the Closing, except for Assumed Liabilities. Sale Order at 12, pp (emphasis added). Paragraphs 38 and 39 of the Sale Order contains a similar injunction against the pursuit of any successor liabilities against New Chrysler. Paragraph 59 of the Sale Order provides that "[t]his Court retains jurisdiction to interpret, implement and enforce the terms and provisions of this Sale Order including to compel delivery of the Purchased Assets, to protect [New Chrysler] against any Claims and to enter any orders under sections 105, 363 or 365 (or other applicable provisions) of the Bankruptcy Code to transfer the Purchased Assets and the Assumed Agreements to [New Chrysler]." Sale Order at 59, pp The Sale Order and the Sale Opinion were affirmed by the Second Circuit. See Indiana State Police Pension Trust v. Chrysler LLC (In re Chrysler LLC), 2009 U.S. App. LEXIS (2d Cir. Aug. 5, 2009). In its affirmance, the Second Circuit specifically noted that it interpreted section 363(f) of the Bankruptcy Code to permit a debtor to broadly sell assets free and clear of liabilities. Chrysler, 2009 U.S. App. LEXIS at * With respect to the Sale Transaction, the Second Circuit noted the free and clear nature of the sale was important: ATI v3-10-

38 It is the transfer of Old Chrysler's tangible and intellectual property to New Chrysler that could lead to successor liability (where applicable under state law) in the absence of the Sale Order's liability provisions. Because appellants' claims arose from Old Chrysler's property, 363(f) permitted the bankruptcy court to authorize the Sale free and clear of appellants' interest in the property. Id. at *50. Relevant Provisions of the Rejection Order and the Rejection Opinion 21. Paragraph 3 of the Rejection Order authorized the Debtors to reject, effective as of June 9, 2009, the dealership agreements identified on Exhibit A to the Rejection Order. Paragraph 5 of the Rejection Order provides, in relevant part, that "[p]ursuant to sections 365 of the Bankruptcy Code, as a result of the rejection of the Rejected Dealer Agreements, each Affected Dealer shall have no further rights (direct, indirect, contractual or otherwise) to act as an Authorized Dealer of the Debtors." Paragraph 7 of the Rejection Order provides that: This Court shall retain jurisdiction to resolve all matters relating to the implementation, enforcement and interpretation of this Order. Without limiting the foregoing, the Court also shall retain jurisdiction with respect to this Order and the Rejected Agreements over (a) any actions by the Affected Dealers against the Debtors or the property of their estates, including, without limitation, any actions in violation of the automatic stay under section 362 of the Bankruptcy Code; and (b) any Rejection Damages Claims or other claims alleged against the Debtors' Estates, and any objections or defenses thereto. Rejection Order at 7, p. 6. None of the dealership agreements with respect to which the Noncompliant Dealers are pursuing litigation was assumed and assigned as part of the Fiat Transaction. Each of these dealership agreements was rejected pursuant to the Rejection Order. 2 2 See Rejection Order, Exhibit A, at pp. 5 (Boucher and Braeger), 7 (Chilson), 9 (Crain), 19 (John Quaden, Johnson Motors), 21 (Lakeland), 26 (Mueller), 27 (Painter's), 34 (Spitzer) and 40 (Wolf's). ATI v3-11-

39 22. In the Rejection Opinion, this Court noted the interrelationship of the rejection of the Noncompliant Dealers' dealership agreements with the consummation of the Fiat Transaction by noting that "rejection of the Rejected Agreements was necessary and appropriate for implementing the Alliance Vitality Plan by enabling the Debtors to consummate the Fiat Transaction and transfer to New Chrysler a smaller, more effective and more profitable dealer network without disruption while limiting the Debtors' postpetition obligations to the Affected Dealers." Rejection Opinion at p. 15. State Court Litigation Brought by Noncompliant Dealers Boucher Actions 23. On June 17, 2009, Boucher Imports, Inc., Braeger Chrysler Jeep, Inc., Chilson, Inc., Quaden Motors, Inc, (a/k/a John Quaden Dodge, Inc.), Johnson Motors of St. Croix Falls, Inc., Lakeland Pontiac-GMC-Jeep, Inc. (a/k/a Lakeland Oldsmobile-Pontiac-GMC), Mueller Chrysler, Inc. and Wolf's Motor Car Company, Inc. (collectively, the "Boucher Plaintiffs") filed a complaint against New Chrysler in the Dane County Circuit Court in Wisconsin, which was assigned Case No. 09-CV-2961 (the "Wisconsin Civil Action") pursuing a variety of claims (described below) relating to their rejected dealer agreements. A copy of the complaint in the Wisconsin Civil Action (the "Wisconsin Civil Complaint") is attached hereto as Exhibit A. On July 13, 2009, New Chrysler removed the Wisconsin Civil Action to federal court. The Wisconsin Civil Action currently is pending in the United States District Court for the Western District of Wisconsin (the "Wisconsin District Court") under Case No. 09-CV-438. The Boucher Plaintiffs have moved for the Wisconsin District Court to remand the action to state court or to abstain from ruling. On August 6, 2009, the Boucher Plaintiffs moved the Wisconsin District Court for a preliminary injunction to force New Chrysler to provide it with vehicles and continue dealer agreements with the rejected dealers notwithstanding the terms of this Court's ATI v3-12-

40 orders to the contrary. A copy of the Boucher Plaintiffs' motion for preliminary injunction is attached hereto as Exhibit B. 24. In the Wisconsin Civil Action, the Boucher Plaintiffs have asserted the following claims. First, they seek a declaratory judgment under Wisconsin law that New Chrysler is required to continue the Boucher Plaintiffs as dealers for Chrysler, Dodge and Jeep vehicles notwithstanding this Court's orders. Second, the Boucher Plaintiffs seek temporary and permanent injunctions requiring that New Chrysler use them as dealers. Third, the Boucher Plaintiffs seek monetary damages against New Chrysler for its refusal to use the Boucher Plaintiffs as dealers after the Closing on June 10, On July 2, 2009, the Boucher Plaintiffs filed another complaint with the Wisconsin Department of Transportation seeking to force New Chrysler to use the Boucher Plaintiffs as dealers. This action was assigned Case No (the "Wisconsin Administrative Action"). A copy of the complaint in the Wisconsin Administrative Action is attached hereto as Exhibit C. On July 31, 2009, New Chrysler removed the Wisconsin Administrative Action to the Wisconsin District Court, where that action is pending as Case No. 09-CV Crain Action 26. On July 21, 2009, the Arkansas Motor Vehicle Commission notified New Chrysler that Crain CDJ, LLC ("Crain") had filed a complaint against New Chrysler. This action was assigned Case Number (the "Arkansas Action"). A copy of the complaint in the Arkansas Action (the "Arkansas Complaint") is attached hereto as Exhibit D. In the Arkansas Action, Crain is seeking the issuance of an order forcing New Chrysler to use Crain as a dealer. Spitzer Action 27. On July 6, 2009, Spitzer Autoworld Sheffield, LLC ("Spitzer") filed a protest with the Motor Vehicle Dealers Board for the State of Ohio (the "Ohio Dealers Board") ATI v3-13-

41 regarding the grant of a Dodge franchise to Tomko Chrysler-Jeep. The Debtors responded to this protest with a letter informing the Ohio Dealers Board of the applicability of the automatic stay. The Ohio Dealers Board informed Spitzer that it believed the automatic stay applied to his protest. Spitzer has asked the Ohio Dealers Board to reconsider this decision. A copy of the correspondence between the parties on this decision is attached hereto collectively as Exhibit E. Painter's Action 28. On August 6, 2009, Painter's Sun Country Chrysler, Inc. ("Painter's") filed a protest with the Utah Motor Vehicle Franchise Advisory Board (the "Utah Dealers Board") regarding the grant of Chrysler franchises to the Stephen Wade Auto Group. A copy of the protest filed by Painter's with the Utah Dealers Board is attached hereto as Exhibit F. Argument 29. This Court should not permit the Noncompliant Dealers to continue their intentional and brazen acts to evade the automatic stay and to collaterally attack the Sale Order and the Rejection Order, in violation of the injunctions granted by those orders. As described below, this Court has the power to stop these violations of the automatic stay and the collateral attacks on this Court's prior orders, and this power should be exercised. The Actions of the Noncompliant Dealers Violate the Automatic Stay 30. Section 362(a)(3) of the Bankruptcy Code bars "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." On the Petition Date, each of the Noncompliant Dealers was party to a dealership agreement with the Debtors and these agreements constituted property of the Debtors' estates. In addition, section 362(a)(6) of the Bankruptcy Code bars "any act to collect, assess, or recover a claim that arose before the commencement of the case under this title." Under section 365(g)(1) of the Bankruptcy Code, the rejection of an executory contract is deemed to ATI v3-14-

42 create a breach of such contract "immediately before the date of filing of the petition," and any resulting damages are treated as prepetition claims under section 502(g)(1) of the Bankruptcy Code. Thus, any actions of the Noncompliant Dealers to establish or collect damages from the Debtors relating to their dealership agreements violate section 362(a)(6) of the Bankruptcy Code. 31. Each of the claims brought in the Wisconsin Civil Action, the Wisconsin Administrative Action, the Arkansas Action and the protests before the Ohio Dealers Board and the Utah Dealers Board is an attempt to litigate the rights of the parties under the rejected dealership agreements in a nonbankruptcy forum. Any determination of what obligations under these agreements survive their rejection necessarily would implicate a determination of what claims the Noncompliant Dealers may have against the Debtors, which in turn implicates the property of the Debtors' estates. 32. Numerous courts have held or noted that, where the underlying substance of the action is an action to assert dominion over property of the estate, such an action is barred by section 362(a)(3) of the Bankruptcy Code. See, e.g., Licensing by Paolo, Inc. v. Sinatra (In re Gucci), 126 F.3d 380, 392 (2d Cir. 1997) (describing previous Second Circuit caselaw with the statement "We have ruled that an action taken against a nondebtor which would inevitably have an adverse impact upon the property of the estate must be barred by the automatic stay...."); 48 th Street Steakhouse, Inc. v. Rockefeller Group, Inc. (In re 48 th Street Steakhouse, Inc.), 835 F.2d 427, 431 (2d Cir. 1987) (applying adverse impact test to find litigation against nondebtor violated the automatic stay); Adelphia Commc'ns Corp. v. The America Channel, LLC (In re Adelphia Commc'ns Corp.), 345 B.R. 69, 78 (Bankr. S.D.N.Y. 2006) (finding antitrust claim against the purchaser of the debtor's assets was in violation of section 362(a)(3) of the Bankruptcy Code); see also Amedisys, Inv. v. Nat'l Century Fin. Enters., Inc., 423 F.3d 567, ATI v3-15-

43 578 (6th Cir. 2005) (staying action against nondebtor where substance of action was an attempt to assert dominion over property of the estate). 33. The mere fact that the Noncompliant Dealers only named New Chrysler and not the Debtors in the actions they filed in nonbankruptcy forums does not alter the fact that these actions constitute attempts to litigate the parties' obligations under the dealer agreements in violation of sections 362(a)(3) and 362(a)(6) of the Bankruptcy Code. The Collateral Attack on the Sale Order and the Rejection Order Should Not Be Allowed to Continue 34. The various non-bankruptcy actions brought by the Noncompliant Dealers have at their base a single set of related goals (a) an evasion of the Sale Order's free and clear provisions; (b) a resurrection of the Noncompliant Dealers' rejected dealership agreements and the Debtors' obligations under these agreements, contrary to the Rejection Order; and (c) ultimately, the imposition of these dealership obligations on New Chrysler. It is difficult to imagine a more direct collateral attack by the Noncompliant Dealers on the Sale Order and the Rejection Order. What makes this attack even more brazen is that while the Noncompliant Dealers participated in and objected to the Sale Order and/or the Rejection Order, none of these parties bothered to appeal either of these orders. In fact, as described below, the true magnitude of the collateral attack is demonstrated by the fact that the claims of the Noncompliant Dealers in the state court actions are in large part the same objections they raised to the Sale Motion (either directly or as part of the Committee of Affected Dealers) and the Rejection Motion and that previously were rejected by this Court. 35. The Boucher Plaintiffs (and certain other Wisconsin-based dealers of the Debtors) filed a lengthy objection to the Rejection Motion (Docket No. 2435) (the "Wisconsin ATI v3-16-

44 Dealer Objection"). In the Wisconsin Dealer Objection, the Boucher Plaintiffs and certain other Wisconsin dealers, asserted, among other things that: (a) (b) (c) The rejection of their dealership agreements did not cut off their alleged right to act as franchised Chrysler dealers for New Chrysler (See Wisconsin Dealer Objection at 24); Rejection did not affect their rights under Wisconsin law (See id. at 26); and The Bankruptcy Code did not preempt the dealer protection provisions of the Wisconsin Motor Vehicle (See id. at 36). In essence, in the Wisconsin Dealer Objection, the Boucher Plaintiffs asserted that Wisconsin's motor vehicle statute trumps the provisions of sections 362, 363 and 365 of the Bankruptcy Code. The Wisconsin Dealer Objection was overruled, the Boucher Plaintiffs did not appeal either the Rejection Order or the Sale Order. 36. In the Wisconsin Civil Action and the Wisconsin Administrative Action, the Boucher Plaintiffs make similar arguments to those raised in the Wisconsin Dealer Objection. For example, in these two actions, the Boucher Plaintiffs assert: (a) (b) (c) The rejection of their dealership agreements did not cut off their alleged right to act as franchised Chrysler dealers for New Chrysler (See Wisconsin Civil Complaint at 51; Wisconsin Administrative Complaint at 37); Rejection did not affect their rights under Wisconsin law (See Wisconsin Civil Complaint at 48; Wisconsin Administrative Complaint at 24); and The Bankruptcy Code did not preempt the dealer protection provisions of the Wisconsin Motor Vehicle (See Wisconsin Civil Complaint at 53-58). Thus, the Boucher Plaintiffs make essentially the same arguments as they made in the Wisconsin Dealer Objection i.e., a claim that the Wisconsin Motor Vehicle Act's protections for dealers preempt the provisions of sections 362, 363 and 365 of the Bankruptcy Code and that the Debtors and New Chrysler have ongoing obligations under the dealership agreements even though these agreements were not assumed under the Sale Order and that were rejected pursuant ATI v3-17-

45 to the Rejection Order. This Court has already rejected this claim. Specifically, the Rejection Opinion noted that "consistent with the Order, the Court concludes that the Dealer Statutes are preempted by 365 with respect to rejection of the Rejected Agreements." Sale Opinion at p. 22. The Court went on in the Rejection Opinion to note that state law provisions like buyback requirements or blocking requirements on the establishment of new dealers frustrate the purposes of section 365 of the Bankruptcy Code and are thus subject to preemption. See id. at pp Like the Boucher Plaintiffs, Crain filed an objection to the Rejection Motion (Docket No. 1651) (the "Crain Objection"). In the Crain Rejection Objection, Crain asserted, among other things, that: (a) (b) Rejection of its dealership agreement with the Debtors would not cut off Crain's rights under Arkansas law (See Crain Objection at 43-35); and Rejection of its dealership agreement would give rise to administrative claims against the Debtors' estates (See id. at 31). In the Arkansas Complaint, Crain seeks an order forcing New Chrysler to use Crain as a dealer or, in essence, the underlying result it sought in filing the overruled Crain Objection. Like the Boucher Plaintiffs, Crain has not appealed the entry of the Sale Order or the Rejection Order. 38. Spitzer and a number of affiliated dealerships also filed an objection to the Rejection Motion (Docket No. 1962) (the "Spitzer Objection"). This objection asserted, among other things, that: (a) (b) The relevant dealer agreements should not be rejected, and the Court should defer to state laws concerning the termination of dealership agreements (See Spitzer Objection at pp ); and The proposed rejection was an attempt to allow other dealers to sell cars in the areas currently serviced by Spitzer and its affiliates. (See id. at p. 19). ATI v3-18-

46 Spitzer's attempts to protest New Chrysler's dealership activities is nothing more than an attempt to use state law to impose burdens on New Chrysler on account of the rejected dealership agreements, which is the result Spitzer sought by prosecuting the overruled Spitzer Objection. Like the other Noncompliant Dealers, Spitzer has not appealed the Sale Order or the Rejection Order. 39. Painter's was a member of the Committee of Chrysler Affected Dealers, which filed a number of objections to both the Sale Motion and the Rejection Motion. See Docket Nos. 1045, 1488 and Each of these objections was overruled. The Committee of Chrysler Affected Dealers did not appeal the Sale Order or the Rejection Order. 40. Just this summer, the United States Supreme Court affirmed the longstanding doctrine that bankruptcy court orders are not subject to collateral attack in other proceedings. See Travelers Indemnity Co. v. Bailey, 129 S.Ct. 2195, U.S. (2009). This case arose out of the Johns-Manville bankruptcy. In that case, the Bankruptcy Court had issued an order enjoining the pursuit of certain claims against Travelers Insurance. See id. 129 S.Ct. at After state court litigation arose against Travelers, the Bankruptcy Court entered an order clarifying the fact that the original injunction acted to bar the state court action. See id. at Certain co-defendants in the subsequent state court actions challenged both whether the supplemental order was in fact an appropriate interpretation of the prior order and whether the bankruptcy court had jurisdiction to issue the original order. See id. at After finding that the supplemental order was an appropriate interpretation of the prior order, the Supreme Court then focused on the fact that a party may not collaterally attack a bankruptcy court order in another forum. In this analysis, the Supreme Court noted that "once the 1986 Orders became final on direct review (whether or not proper exercises of ATI v3-19-

47 bankruptcy court jurisdiction and power), they became res judicata as to the parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose." Id. at The Supreme Court then further stated that "[s]o long as respondents or those in privity with them were parties to the Manville bankruptcy proceeding, and were given a fair chance to challenge the Bankruptcy Court's subject-matter jurisdiction, they cannot challenge it by not resisting enforcement of the 1986 Orders." Id. at The Noncompliant Dealers are engaged in exactly such an attack on the Sale Order and the Rejection Order. After their arguments were rejected by this Court, they have commenced litigation in other forums rather than pursue the proper remedy of filing a timely appeal of those orders. Under the precedents of this Circuit, a bankruptcy court has the power under section 105(a) of the Bankruptcy Code to prevent such a collateral attack on its orders. See Adelphia, 345 B.R. at 86. This Court should not permit the collateral attack on its previous orders by the Noncompliant Dealers to continue and should exercise its powers under section 105(a) to enjoin this attack. This Court May Find the Noncompliant Dealers in Contempt 43. Bankruptcy Rule 9020 expressly provides that a motion for a contempt order may be brought as a contested matter under Bankruptcy Rule Courts in this Circuit have long-recognized that a bankruptcy court has the power to find parties who violate the automatic stay or prior court orders in contempt. See, e.g., Bartel v. Eastern Airlines, 1998 U.S. App. Lexis 71, at *6 (2d Cir. Jan. 6, 1998) (affirming bankruptcy court's award of sanctions against party who violated automatic stay in corporate debtor's case); Maritime Asbestosis Legal Clinic v. LTV Steel Co., Inc. (In re Chateaugay Corp.), 920 F.2d 183, 187 (2d Cir. 1990) (noting that, even though sanctions under section 362(h) [now 362(k)(1)] are not available to corporate ATI v3-20-

48 debtors, violations of a corporate debtor's stay are still subject to a court's contempt powers); In re Chief Executive Officers Clubs, Inc., 359 B.R. 527, 542 (Bankr. S.D.N.Y. 2007) (imposing contempt sanctions on officer of corporate debtor for violating court order); see also Placid Refining Co.. v. Terrebonne Fuel & Lube, Inc. (In re Terrebonne Fuel & Lube, Inc.), 108 F.3d 609, 613 (5th Cir. 1997) ("[w]e conclude that a bankruptcy court can issue any order, including a civil contempt order, necessary or appropriate to carry out the provisions of the Bankruptcy Code."). 44. It is difficult to conceive of a more willful and knowing contempt of this Court's orders than to actually participate in the litigation which led to the Sale Order and/or the Rejection Order and to then file actions in other courts raising the same overruled arguments as if the Sale Order and the Rejection Order were never entered. Yet this is exactly the conduct that the Noncompliant Dealers are engaging in. These actions have directly damaged the Debtors and New Chrysler by forcing them to incur legal fees and expenses in defending against these actions. It would be a proper exercise of the contempt power, and a deterrent to prevent other dealers from filing similar litigation, to require the Noncompliant Dealers to pay the fees the Debtors and New Chrysler have incurred in preparing and prosecuting this Motion, preparing and filing responsive pleadings in the Wisconsin Civil Action, the Wisconsin Administrative Action and the Arkansas Action and responding to the protests by Spitzer (if the Ohio Dealers Board were to permit the protest to proceed) and Painter's. Notice 45. No trustee or examiner has been appointed in these chapter 11 cases. In accordance with the Administrative Order, Pursuant to Bankruptcy Rule 1015(c), Establishing Case Management and Scheduling Procedures (Docket No. 661) (the "Case Management Order"), entered on May 12, 2009, notice of this Motion has been given to the parties identified ATI v3-21-

49 on the General Service List and the Special Service List (as such terms are identified in the Case Management Order). Notice has also been provided to each of the Noncompliant Dealers and their counsel. The Debtors and New Chrysler submit that no other or further notice need be provided. Prior Request 46. No prior request for the relief sought in this Motion has been made to this or any other Court. ATI v3-22-

50 WHEREFORE, the Debtors and New Chrysler respectfully request that this Court: (i) enter an order substantially in the form attached hereto as Exhibit G, granting the relief sought herein; and (ii) grant such other and further relief to the Debtors and New Chrysler as the Court may deem proper. Dated: August 13, 2009 New York, New York Respectfully submitted, /s/ Corinne Ball Corinne Ball Veerle Roovers JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) David G. Heiman JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Jeffrey B. Ellman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION ATI v3-23-

51 /s/ Robert D. Cultice Robert D. Cultice WILMERHALE 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Mark T. Clouarte Gwen J. Young WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) ATTORNEYS FOR CHRYSLER GROUP LLC ATI v3-24-

52 EXHIBIT A [Complaint in Wisconsin Civil Action] ATI v3

53

54

55

56

57

58

59

60

61 EXHIBIT B [Wisconsin Plaintiffs Motion for Preliminary Injunction] ATI v3

62 Case: 3:09-cv slc Document #: 21 Filed: 08/06/2009 Page 1 of 2 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN BOUCHER IMPORTS, INC., BRAEGER CHRYSLER JEEP, INC., CHILSON, INC., QUADEN MOTORS, INC. (a/k/a JOHN QUADEN DODGE, INC.), JOHNSON MOTORS OF ST. CROIX FALLS, INC., LAKELAND PONTIAC-GMC-JEEP, INC. (a/k/a LAKELAND OLDSMOBILE-PONTIAC- GMC), MUELLER CHRYSLER, INC., and WOLF'S MOTOR CAR COMPANY, INC., Case No. 09-CV-438 Plaintiffs, v. CHRYSLER GROUP LLC, Defendant. MOTION FOR PRELIMINARY INJUNCTION Plaintiffs, by their attorneys, Boardman, Suhr, Curry & Field, LLP, move the Court for an Order for a preliminary injunction enjoining the Defendant to continue the Chrysler, Dodge, and/or Jeep franchises granted the Plaintiff Dealers by Chrysler Motors LLC in full force and operation while the above-captioned action is pending. The grounds for this motion are set forth in the Plaintiffs Brief in Support of Motion for Preliminary Injunction and in the Plaintiffs Proposed Findings of Fact in Support of Their Motion for Preliminary Injunction. As discussed in the Plaintiffs Brief in Support of Motion for Preliminary Injunction, the Plaintiff Dealers do not believe that this court has jurisdiction to decide this motion. The Plaintiff Dealers currently have a Motion to Remand This Action to State Court Or, In the Alternative,

63 Case: 3:09-cv slc Document #: 21 Filed: 08/06/2009 Page 2 of 2 For Abstention ( Motion to Remand or Abstain ) pending before this Court. Among other things, the Motion to Remand or Abstain seeks remand of this action on the basis that this Court lacks jurisdiction. Nevertheless, the Plaintiff Dealers are bringing this Motion for Preliminary injunction in case this court decides that it does have jurisdiction to hear this matter and declines to abstain or remand the action on equitable grounds. Dated this 6th day of August, BOARDMAN, SUHR, CURRY & FIELD, LLP By: /s/ Paul R. Norman Paul R. Norman; SBN pnorman@boardmanlawfirm.com Andrew N. DeClercq; SBN adeclercq@boardmanlawfirm.com 1 S. Pinckney St., 4 th Floor P. O. Box 927 Madison, WI Telephone: Facsimile: Attorneys for Plaintiffs F:\DOCS\wd\50002\2DRA\A DOC 2

64 EXHIBIT C [Complaint in Wisconsin Administrative Action] ATI v3

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84 EXHIBIT D [Complaint in Arkansas Action] ATI v3

85

86

87

88

89

90

91 EXHIBIT E [Correspondence on Spitzer Protest] ATI v3

92

93

94

95

96

97

98

99 EXHIBIT F [Painter's Protest] ATI v3

100

101

102

103 EXHIBIT G [Proposed Order] ATI v3

104 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : : Old Carco LLC : (f/k/a Chrysler LLC), et al., : : Debtors. : : x Chapter 11 Case No (AJG) (Jointly Administered) ORDER, PURSUANT TO SECTIONS 105, 362, 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9020, ENFORCING AUTOMATIC STAY AND PROVISIONS OF (A) ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION THEREWITH AND RELATED PROCEDURES AND (III) GRANTING RELATED RELIEF; AND (B) ORDER, PURSUANT TO SECTIONS 105 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF This matter coming before the Court on the Joint Motion of Debtors and Debtors in Possession and Chrysler Group LLC, Pursuant to Sections 105, 362, 363 and 365 of the Bankruptcy Code and Bankruptcy Rule 9020, for an Order Enforcing Automatic Stay and Provisions of (A) Order (I) Authorizing the Sale of Substantially all of the Debtors' Assets Free and Clear of all Liens, Claims, Interests and Encumbrances, (II) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith and Related Procedures and (III) Granting Related Relief; and (B) Order, Pursuant to Sections 105 and 365 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting ATI v3

105 Certain Related Relief (the "Motion"), 1 jointly filed by the debtors and debtors in possession in the above-captioned cases (collectively, the "Debtors") and Chrysler Group LLC ("New Chrysler"); the Court having reviewed the Motion and having considered the statements of counsel and the evidence adduced with respect to the Motion at a hearing before the Court (the "Hearing"); the Court finding that (i) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, (ii) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2), (iii) notice of the Motion and the Hearing was sufficient under the circumstances and (iv) the Noncompliant Dealers pursuit of litigation, protests and administrative actions in other forums constitutes a knowing and intentional violation of the automatic stay and the provisions of the Sale Order and the Rejection Order; and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; IT IS HEREBY ORDERED THAT: 1. The Motion is GRANTED as set forth herein. 2. The Noncompliant Dealers shall immediately cease and desist from any further prosecution of the Wisconsin Civil Action, the Wisconsin Administrative Action, the Arkansas Action or the protests of Spitzer with the Ohio Dealers Board and Painter's with the Utah Dealers Board, or any similar litigation, protest or proceeding in any forum. 3. Any further prosecution of the Wisconsin Civil Action, the Wisconsin Administrative Action, the Arkansas Action or Spitzer's protest with the Ohio Dealers Board or Painter's protest with the Utah Dealers Board, or any similar litigation, protest or proceeding in any forum, shall constitute contempt of this Court. 1 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion. ATI v3-2-

106 4. The Debtors and New Chrysler are awarded their reasonable attorneys' fees and costs in bringing and prosecuting the Motion and in responding to the litigation brought in other forums by the Noncompliant Dealers as sanctions for the Noncompliant Dealers' willful violations of the automatic stay, the Sale Order and the Rejection Order. 5. The Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation of this Order. Dated:, 2009 New York, New York UNITED STATES BANKRUPTCY JUDGE ATI v3-3-

107 Hearing Date and Time: August 27, 2009 at 10:00 a.m., E.T. JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) Corinne Ball Veerle Roovers JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) David G. Heiman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) Jeffrey B. Ellman WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Robert D. Cultice WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) Mark T. Clouatre Gwen J. Young Attorneys for Chrysler Group LLC Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re : : Old Carco LLC : (f/k/a Chrysler LLC), et al., : : Debtors. : x Chapter 11 Case No (AJG) (Jointly Administered) CONSOLIDATED REPLY OF DEBTORS AND DEBTORS IN POSSESSION AND CHRYSLER GROUP LLC TO RESPONSES TO JOINT MOTION OF DEBTORS AND DEBTORS IN POSSESSION AND CHRYSLER GROUP LLC, PURSUANT TO SECTIONS 105, 362 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9020, FOR AN ORDER ENFORCING AUTOMATIC STAY AND PROVISIONS OF (A) ORDER (I) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS' ASSETS FREE AND CLEAR OF ALL LIENS, CLAIMS, INTERESTS AND ENCUMBRANCES, (II) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES IN CONNECTION THEREWITH AND RELATED PROCEDURES AND (II) GRANTING RELATED COI v6

108 RELIEF; AND (B) ORDER, PURSUANT TO SECTIONS 105 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006, (A) AUTHORIZING THE REJECTION OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES WITH CERTAIN DOMESTIC DEALERS AND (B) GRANTING CERTAIN RELATED RELIEF COI v6

109 TABLE OF CONTENTS Page PRELIMINARY STATEMENT... 2 ARGUMENT... 4 I. THE SALE ORDER EXPRESSLY PROHIBITS THE NONCOMPLIANT DEALERS FROM RAISING THE ASSERTED CLAIMS AGAINST NEW CHRYSLER... 4 II. THE NONCOMPLIANT DEALERS ALSO ARE IN VIOLATION OF THE REJECTION ORDER III. THE NONCOMPLIANT DEALERS ARE BARRED FROM ATTACKING THE PROVISIONS OF THE SALE ORDER OR THE REJECTION ORDER A. The Litigation is an Impermissible Collateral Attack on the Prior Orders B. The Noncompliant Dealers Cannot Challenge the Provisions of the Sale Order and the Rejection Order in Later Litigation IV. THE NONCOMPLIANT DEALERS ARE IN VIOLATION OF THE AUTOMATIC STAY V. THE BANKRUPTCY COURT HAS JURISDICTION OVER THE MOTION TO ENFORCE VI. THE WMVDL IS PREEMPTED AND 28 U.S.C. 959 DOES NOT FORCE THE DEBTORS AND NEW CHRYSLER TO COMPLY WITH THE WMVDL VII. THE AWARD OF CONTEMPT SANCTIONS AGAINST THE NONCOMPLIANT DEALERS IS APPROPRIATE CONCLUSION COI v6 -i-

110 TABLE OF AUTHORITIES CASES Page Ali v. Mukasey, 529 F.3d 478 (2d Cir. 2008)...20, 21 Allegheny Univ. Hosps. v. Nat'l Union of Hosp. & Health Care Employees (In re Allegheny Health, Educ. and Research Found.), 383 F.3d 169 (3d Cir. 2004)...24 B.N. Realty Assoc. v. Lichtenstein, 238 B.R. 249 (S.D.N.Y. 1999)...24 Balaber-Strauss v. Markowitz (In re Frankel), 192 B.R. 623 (Bankr. S.D.N.Y. 1996)...28 Bartel v. Eastern Airlines, 1998 U.S. App. Lexis 71 (2d Cir. Jan. 6, 1998)...28 Bergstrom v. Dalkon Shield Claimants Trust (In re A.H. Robins Co., Inc.), 86 F.3d 364 (4th Cir. 1996)...25 Cohen v. Drexel Burnham Lambert Group (In re Drexel Burnham Lambert Group, Inc.), 138 B.R. 637 (Bankr. S.D.N.Y. 1992)...16 FutureSource LLC v. Reuters Ltd., 312 F.3d 281 (7th Cir. 2002)...20 Grausz v. Englander, 321 F.3d 467 (4th Cir. 2003)...25 In re Eveleth Mines, L.L.C., 318 B.R. 682 (8th Cir. B.A.P. 2004)...26 In re Millennium Seacarriers, Inc., 2004 WL (S.D.N.Y. Jan. 14, 2004)...26 In re Paris Indus. Corp., 132 B.R. 504 (D. Maine 1991)...26 In re Trans World Airlines, Inc., 322 F.3d 283 (3d Cir. 2003)...10, 11 COI v6 -ii-

111 TABLE OF AUTHORITIES (cont d.) Page Indiana State Police Pension Trust v. Chrysler LLC (In re Chrysler LLC), 2009 U.S. App. LEXIS (2d Cir. Aug. 5, 2009)...10, 11, 12 Jamaica Shipping Co. Ltd. v. Orient Shipping Rotterdam (In re Millennium Seacarriers, Inc.), 458 F.3d 92 (2d Cir. 2006)...24 Lomas v. Northern Trust Co., 117 B.R. 64 (S.D.N.Y. 1990)...23 Luan Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223 (2d Cir. 2002)...24, 25 Medical Malpractice Ins. Ass'n v. Hirsch (In re Lavigne), 114 F.3d 379 (2d Cir. 1997)...22, 23 Monahan v. New York City Dep't of Corr., 214 F.3d 275 (2d Cir. 2000)...20 Nisselsen v. Empyrean Inv. Fund, L.P. (In re MarketXT Holdings Corp.), 2007 U.S. Dist. Lexis (S.D.N.Y. Apr. 3, 2007)...28 NWL Holdings, Inc. v. Eden Ctr., Inc. (In re Ames Dep't Stores, Inc.), 317 B.R. 260 (Bankr. S.D.N.Y. 2004)...24, 25, 26 Pike v. Freeman, 266 F.3d 78 (2d Cir. 2001)...20 Poplar Run Five Ltd. P'ship v. Virginia Electric & Power Co. (In re Poplar Run Five Ltd. P'ship), 192 B.R. 848 (Bankr. E.D. Va. 1995)...25 Robertson v. Isomedix (In re Int'l Nutronics), 28 F.3d. 965 (9th Cir. 1994)...20 Shady Records, Inc. v. Source Enter., 351 F.Supp.2d 64 (S.D.N.Y. 2004)...28 South Motor Co. of Dade County v. Carter-Pritchett-Hodges, Inc. (In re MMH Automotive Group, LLC ), 385 B.R. 347 (Bankr. S.D. Fla. 2008)...24 Travelers Indemnity Co. v. Bailey, 129 S.Ct. 2195, U.S. (2009)... passim COI v6 -iii-

112 TABLE OF AUTHORITIES (cont d.) Page United Mine Workers of Am Benefit Plan v. Leckie Smokeless Coal Co. (In re Leckie Smokeless Coal Co.), 99 F.3d. 573 (4th Cir. 1996)...11, 12 Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565 (6th Cir. 2008)...20 STATUTES 11 U.S.C. 101(5)...4, 6 11 U.S.C , 23, U.S.C passim 11 U.S.C passim 11 U.S.C. 502(g) U.S.C. 157(b)(1) U.S.C Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C Ohio Revised Code Wis. Stat (13)...15 Wis. Stat (7) and (1)(i)...6 Wis. Stat (1)(i)(2)...7 COI v6 -iv-

113 TO THE HONORABLE ARTHUR J. GONZALEZ, UNITED STATES BANKRUPTCY JUDGE: Old Carco LLC F/K/A Chrysler LLC ("Old Carco") and its affiliated debtors and debtors in possession (collectively with Old Carco, the "Debtors") and Chrysler Group LLC f/k/a New CarCo Acquisition LLC ("New Chrysler") hereby reply (i) in support of the Joint Motion of Debtors and Debtors in Possession and Chrysler Group LLC, Pursuant to Sections 105, 362, 363 and 365 of the Bankruptcy Code and Bankruptcy Rule 9020, for an Order Enforcing Automatic Stay and Provisions of (A) Order (I) Authorizing the Sale of Substantially All of the Debtors' Assets Free and Clear of All Liens, Claims, Interests and Encumbrances, (II) Authorizing the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith and Related Procedures and (III) Granting Related Relief; and (B) Order, Pursuant to Sections 105 and 365 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 5162) (the "Motion to Enforce"), 1 filed on August 13, 2009, and (ii) in opposition to the objections to the Motion to Enforce filed by the Boucher Plaintiffs (Docket No. 5250) (the "Boucher Objection"), Spitzer (Docket No. 5254) (the "Spitzer Objection") and Crain (Docket Nos. 5928, 5959 and 5960) (collectively, the "Crain Objection" 2 and, together with the Boucher Objection and the Spitzer Objection, the "Objections"). 3 In support of this Reply, the Debtors and New Chrysler respectfully represent as follows: Capitalized terms not otherwise defined herein have the meanings given to them in the Motion to Enforce. Citations to the Crain Objection herein refer to Docket No Shortly before the filing of this Reply, the Official Committee of Unsecured Creditors in these cases (the "Creditors' Committee") filed a limited response to the Motion to Enforce (Docket No. 5728) (the "Limited Response"). Although the Debtors primarily file this Reply to address the Objections, certain points raised in the Limited Response also are addressed below. COI v6

114 PRELIMINARY STATEMENT As this Court is well aware, the Fiat Transaction, which was the only alternative to immediate piecemeal liquidation in these cases, was predicated on New Chrysler purchasing certain operating assets of the Debtors free and clear of all liabilities that were not being expressly assumed under the Purchase Agreement. Among other things, the sale to New Chrysler was free and clear of liabilities to dealers whose dealer agreements were not being assumed and assigned as part of the Fiat Transaction. The "free and clear" nature of the sale was a fundamental premise of the transaction. If New Chrysler could not purchase the Debtors' assets free and clear of dealer and other liabilities, the record established that New Chrysler simply would not have consummated the Fiat Transaction, which permitted the ongoing operation of the Debtors' business under new ownership and the assumption and assignment of more than 2,300 dealer agreements. In the absence of a "free and clear" sale order, it is uncontroverted that the Debtors would have had no alternative but to conduct a piecemeal liquidation that did not preserve going concern value. If this had occurred, none of the Debtors' dealers would be able to act as Chrysler dealers on a going forward basis. After hotly contested litigation in this Court, the Fiat Transaction was approved by the Sale Order, which was subsequently affirmed by the Second Circuit. Contrary to what is being claimed by the Noncompliant Dealers in their Objections, the Sale Order specifically transferred the purchased assets free and clear of any claims and interests, including, without limitation, all liabilities, encumbrances, rights, remedies and restrictions of any kind other than Assumed Liabilities (as defined in the Sale Order). The Sale Order also specifically barred any claims for successor or transferee liability, such as the claims that New Chrysler is a successor manufacturer being brought under various state dealer statutes by the Noncompliant Dealers. New Chrysler consummated the Fiat Transaction in reliance on these provisions. The Debtors COI v6-2-

115 also requested and received approval to reject their domestic dealer agreements that were not assumed and assigned as part of the Fiat Transaction. The only appeal of the Rejection Order has now been voluntarily dismissed, so both the Rejection Order and the Sale Order are now final orders for which all appellate remedies have been exhausted. Despite the finality of the Sale Order and the Rejection Order and the fact that these orders barred the assertion of liabilities under rejected dealer agreements against New Chrysler or the continued enforcement of these rejected contracts against the Debtors, the Noncompliant Dealers have filed litigation in numerous nonbankruptcy forums collaterally attacking both orders. These collateral attacks include the filing of litigation against New Chrysler or the Debtors asserting rights arising under or related to the rejected dealer agreements. 4 Given the finality of the Sale Order and the Rejection Order, this Court should not now revisit the merits of those orders, or otherwise relitigate them, as implicitly requested by the Noncompliant Dealers' Objections. Instead, the basic question presented is a straightforward one are the Noncompliant Dealers in violation of the plain text of the Sale Order and the Rejection Order? The answer to this question is yes. To protect the integrity of the sale process and the results of the sale, this Court should enforce its own orders and bring the litigation filed by the Noncompliant Dealers to an end before that litigation undermines the terms of the sale to New Chrysler, further consumes the time and resources of these estates or incites other dealers to adopt similar tactics. 5 This Court also must stop the Noncompliant Dealers' obvious efforts to 4 5 Since the filing of the Motion to Enforce, Painter's Sun Country Chrysler, Inc. ("Painter's") has withdrawn its action in Utah against New Chrysler. The Debtors and New Chrysler are no longer seeking any relief against Painter's and, for purposes of this brief and the proposed order granting the Motion to Enforce, Painter's should not be considered a Noncompliant Dealer. Even claims against New Chrysler may impact the Debtors' estates. For example, under section 2.12 of the Purchase Agreement, the Debtors have agreed to take such further actions that are reasonably necessary or appropriate to effectuate the Fiat Transaction. COI v6-3-

116 have other tribunals determine the claimed rights of rejected dealers under or related to their rejected dealer agreements in violation of the Sale Order, the Rejection Order and the automatic stay. ARGUMENT I. THE SALE ORDER EXPRESSLY PROHIBITS THE NONCOMPLIANT DEALERS FROM RAISING THE ASSERTED CLAIMS AGAINST NEW CHRYSLER On May 3, 2009, the Debtors filed the Sale Motion, which sought approval of the Fiat Transaction. In the Sale Motion, the Debtors sought approval to transfer the assets as part of the Fiat Transaction free and clear of "all liens, claims (as such term is defined by section 101(5) of the Bankruptcy Code), encumbrances, rights, remedies, restrictions, interests, liabilities and contractual commitments of any kind or nature whatsoever, whether arising before or after the Petition Date, whether at law or in equity, including all rights or claims based on any successor or transferee liability, all environmental claims, [and] all change in control provisions," among other things. Sale Motion pp , 57 (emphasis added). Numerous objections were filed to the Sale Motion. Among these objections were oppositions to the free and clear provisions of the proposed sale order with respect to successor or transferee liability asserted by both tort plaintiffs and multiple groups of dealers. See, e.g., Docket Nos. 992 (tort), 1045 (dealer), 1120 (tort), 1175 (tort), 1189 (dealer), 1197 (tort), 1366 (tort) and 1529 (dealer). After extensive briefing and argument, on May 31, 2009, this Court issued its Opinion Granting Debtors' Motion Seeking Authority to Sell, Pursuant to 11 U.S.C. 363, Substantially All of the Debtors' Assets (Docket No. 3073) (the "Sale Opinion"). In the Sale Opinion, this Court recognized that the Fiat Transaction was the only viable alternative to an immediate liquidation of the Debtors: COI v6-4-

117 Here, the Debtors have established a good business reason for the sale of their assets at the early stage of these cases. Notwithstanding the highly publicized and extensive efforts that have been expended in the last two years to seek viable alliances for Chrysler, the Fiat Transaction is the only option that is currently viable. The only other alternative is the immediate liquidation of the company. Sale Opinion at pp (emphasis added). As the Court found, an integral component of the Fiat Transaction was that New Chrysler would be assuming only a designated subset of the Debtors' dealership agreements. In the Sale Opinion, this Court expressly recognized as follows: As in any case, the potential purchaser, New Chrysler, identified the assets it desired to purchase, which of necessity dictated the contracts that the Debtor would assume.... Here, as part of the economic valuation of the transaction, New Chrysler indicated which of the Debtors' contracts it considered valuable to its future venture and directed that those be assumed and assigned to it. Obviously, the value that New Chrysler would agree to pay for the assets has to be impacted by the inclusion or exclusion of certain contracts.... The purchaser has made a business decision as to which contracts it desires to assume. Indeed, other OEM's are engaged in cost-cutting efforts to enhance their liquidity and are following similar strategies by rationalizing their dealership networks. In every bankruptcy case involving the sale of substantially all of a debtor's assets, a purchaser may decide to assume certain contracts but not others. Sale Opinion at pp (emphasis added). When it approved the Fiat Transaction, the Court was well aware that the proposed transaction included the assumption and assignment of only a portion of the Debtors' dealer agreements, and the Court made it clear that the sale was free and clear of any "Claims" of the non-assumed dealers. The introduction to the Sale Order defined the term "Claims" broadly, providing that the Fiat Transaction was to be: free and clear of liens, claims (as such term is defined by section 101(5) of the Bankruptcy Code), liabilities, encumbrances, rights, remedies, restrictions and interests and encumbrances of COI v6-5-

118 any kind or nature whatsoever whether arising before or after the Petition Date, whether at law or in equity, including all claims or rights based on any successor or transferee liability, all environmental claims, all change in control provisions, all rights to object or consent to the effectiveness of the transfer of the Purchased Assets to the Purchaser or to be excused from accepting performance by the Purchaser or performing for the benefit of the Purchaser under any Assumed Agreement and all rights at law or in equity (collectively, "Claims").... Sale Order at pp. 2-3 (emphasis added). Although counsel to the Boucher Plaintiffs cite to this language in their Objection, they then incorrectly assert contrary to the plain language of the Court's Sale Order that the definition of Claims was limited to the phrase "claims (as such term is defined in section 101(5) of the Bankruptcy Code)." Boucher Objection at p. 14, 28. That is clearly erroneous. The Boucher Plaintiffs conveniently ignore the additional ninety-plus words in the definition of "Claims" cited above. When read in its entirety, the definition of "Claims" in the Sale Order specifically includes all claims or rights of any kind, including, among many other things, liabilities based on any theory of successor or transferee liabilities. In the Boucher Objection, the Boucher Plaintiffs concede that the basis of their claims in the litigation in Wisconsin against New Chrysler is a theory that New Chrysler is a successor to the Debtors. See Boucher Objection at pp. 6-8, For example, in their Objection, the Boucher Plaintiffs describe the relief sought in the Wisconsin Civil Action as follows: The Wisconsin Civil Action seeks: (a) a judicial order temporarily enjoining New Chrysler to continue the Chrysler, Jeep and/or Dodge franchises granted the [Boucher Plaintiffs] by Old Carco while the action is pending; (b) a declaratory judgment that the [Boucher Plaintiffs] have the right to have their Chrysler, Jeep and/or Dodge franchises continued by New Chrysler, until such time as those franchises are cancelled or discontinued in accordance with Wis. Stat (7) and (1)(i); (c) a judgment permanently enjoining New Chrysler from violating that right; and (d) a judgment awarding the [Boucher Plaintiffs'] COI v6-6-

119 any pecuniary loss caused by New Chrysler's alleged violation of Wis. Stat (1)(i)(2). Boucher Objection at pp. 7, 14. Notwithstanding their assertion to the contrary, the Boucher Plaintiffs' argument is nothing but a successor liability theory. That is also clear from the provisions of Wisconsin Statute (1)(i)(2), which is the primary statutory authority relied upon by the Boucher Plaintiffs rely to sue New Chrysler. The Boucher Objection quotes that provision as follows: If there is a change in a manufacturer, importer or distributor, a motor vehicle dealer's franchise granted by the former manufacturer, importer or distributor shall continue in full force and operation under the new manufacturer, importer or distributor unless a mutual agreement of cancellation is filed with the department of transportation between the manufacturer, importer or distributor and the dealer. Boucher Objection at p. 6, 12 (emphasis in objection). As the Boucher Plaintiffs' own brief makes clear, the statutory basis for their claims is a successor or transferee liability based on the Debtors' prior ownership of the assets. The Sale Order broadly covers all such successor and transferee liabilities in addition to the other broadly defined Claims. The Boucher Objection also alleges that the standards to transfer assets free and clear under section 363(f) of the Bankruptcy Code are not met with respect to the alleged obligations of the Debtors and New Chrysler under the Wisconsin Statute. However, this Court already heard and decided that issue. The Court found that the legal standards of section 363(f) of the Bankruptcy Code were met. See Sale Order at W-BB. The Court also specifically found in the Sale Order that "[t]he Purchaser would not have entered into the Purchase Agreement and would not consummate the Sale Transaction, thus adversely affecting the Debtors, their estates, creditors, employees, retirees and other parties in interest, if the sale of the Purchased Assets was COI v6-7-

120 not free and clear of all Claims other than Assumed Liabilities, or if the Purchaser would, or in the future could, be liable for any such Claims...." Id. at AA. Under paragraph 9 of the Sale Order, the assets purchased by New Chrysler under the Purchase Agreement "shall be free and clear of all Claims except for Assumed Liabilities." Paragraph 12 of the Sale Order helped implement this transfer of assets as part of the Fiat Transaction free and clear of all "Claims" by providing as follows: Except as otherwise provided in the Purchase Agreement, all persons and entities (and their respective successors and assigns), including, but not limited to, all debt security holders, equity security holders, affiliates, governmental, tax and regulatory authorities, lenders, customers, dealers, employees, trade creditors, litigation claimants and other creditors, holding Claims (whether legal or equitable, secured or unsecured, known or unknown, matured or unmatured, contingent or non-contingent, liquidated or unliquidated, senior or subordinated) except for Assumed Liabilities or Claims against any Purchased Company, arising under or out of, in connection with, or in any way relating to, the Debtors, the Purchased Assets, the operation of the Business prior to Closing or the transfer of the Purchased Assets to [New Chrysler], are hereby forever barred, estopped and permanently enjoined from asserting such Claims against [New Chrysler], its successors or assigns, its property or the Purchased Assets. No such persons or entities shall assert against [New Chrysler] or their successors in interest any Claim arising from, related to or in connection with the ownership, sale or operation of any Asset prior to the Closing, except for Assumed Liabilities. Sale Order at 12, pp (emphasis added). This provision of the Sale Order clearly prohibits and enjoins the assertion by dealers (such as the Noncompliant Dealers) of any "Claims" against New Chrysler. As stated previously, the broad definition of "Claims" in the Sale Order includes successor or transferee liability obligations, such as those under the WMVDL relied upon by the Boucher Plaintiffs, the claimed rights under Ohio Revised Code on which Spitzer relies and the claimed rights under the Arkansas Motor Vehicle Commission Act on which Crain relies. COI v6-8-

121 In addition, other provisions of the Sale Order underscore the breadth of the Sale Order and make clear that the Noncompliant Dealers are violating the Court's Order by pursuing the litigation filed against New Chrysler in other forums. Paragraphs 38 and 39 of the Sale Order contain an injunction against the pursuit of any successor liabilities against New Chrysler. Paragraph 41 of the Sale Order states that "[f]or the avoidance of doubt: (a) with respect to each Excluded Contract, the Purchaser is not acquiring any right, title or interest in, to and under such Excluded Contract...." Paragraph 59 of the Sale Order provides that "[t]his Court retains jurisdiction to interpret, implement and enforce the terms and provisions of this Sale Order including to compel delivery of the Purchased Assets, to protect [New Chrysler] against any Claims and to enter any orders under sections 105, 363 or 365 (or other applicable provisions) of the Bankruptcy Code to transfer the Purchased Assets and the Assumed Agreements to [New Chrysler]." Sale Order at 59, pp In an attempt to avoid the impact of these clear provisions of the Sale Order, Crain asserts that paragraph 23 of the Sale Order resurrects liability under the state dealer statutes. This paragraph clarifies that "[n]othing in th[e] Sale Order or in the Purchase Agreement releases, nullifies or enjoins the enforcement of any liability to a governmental unit under police and regulatory statutes or regulations that any entity would be subject to as the owner or operator of property after the date of entry of this Sale Order." However, Crain ignores the fact that this paragraph only addresses liability to governmental units and not to private entities like the Noncompliant Dealers. Moreover, that issue was already litigated as part of the sale process and the rejection process. Other dealers claimed that the state dealer laws were subject to the police power exception, but the Court rejected that argument after thoroughly considering the issue. See Rejection Opinion at p Thus, the preservation of governmental regulatory powers COI v6-9-

122 cannot excuse the Noncompliant Dealers' violations of the free and clear provisions of the Sale Order. Crain's tortured analysis essentially would require that one provision of the Sale Order would effectively undermine, if not eviscerate, another provision of the order. Clearly, this was not the intent of the Court. No dealer appealed the entry of the Sale Order and its provisions barring the assertion of claims against New Chrysler on account of the dealer agreements that were not assumed and assigned as part of the Fiat Transaction. However, other parties did appeal the Sale Order. Among the parties appealing the entry of the Sale Order were certain tort claimants who unsuccessfully challenged the very free and clear provisions of the Sale Order that the Noncompliant Dealers are now violating. In their objection to the free and clear provisions of the Sale Order, the tort claimants argued on appeal that a transfer under section 363(f) of the Bankruptcy Code free and clear of any "interests in property" did not lead to a transfer free and clear of personal injury claims. See Indiana State Police Pension Trust v. Chrysler LLC (In re Chrysler LLC), 2009 U.S. App. LEXIS at *41 (2d Cir. Aug. 5, 2009). In analyzing that contention, the Second Circuit relied heavily on In re Trans World Airlines, Inc., 322 F.3d 283 (3d Cir. 2003). In that case, the Third Circuit was confronted with a claim that a bankruptcy sale of assets of debtor Trans World Airlines, Inc. ("TWA") could not be made free and clear of TWA's obligation to honor vouchers issued to flight attendants under a class action settlement of employment discrimination claims. See Trans World Airlines, 322 F.3d at 285. Quoting Trans World Airlines, the Second Circuit noted that "'the trend seems to be towards a more expansive reading of interests in property which encompasses other obligations that may flow from ownership of the property.'" Chrysler, 2009 U.S. App. LEXIS COI v6-10-

123 17441 at *42-43 (quoting Trans World Airlines, 322 F.3d at 289). The Second Circuit went on to state: The Third Circuit reasoned that to "equate interests in property with only in rem interests such as liens would be inconsistent with section 363(f)(3), which contemplates that a lien is but one type of interest." 322 F.3d at 290. After surveying its own precedents and the Fourth Circuit's decision in United Mine Workers of Am Benefit Plan v. Leckie Smokeless Coal Co. (In re Leckie Smokeless Coal Co.), 99 F.3d. 573 (4th Cir. 1996), the TWA Court held that "[w]hile the interests of the plaintiffs in the assets of TWA's bankruptcy estate are not interests in property in the sense that they are not in rem interests,.... they are interests in property within the meaning of section 363(f) in the sense that they arise from the property being sold. Chrysler, 2009 U.S. App. Lexis at *44-45 (quoting Trans World Airlines, 322 F.3d at 290) (emphasis in Chrysler.) The Second Circuit agreed with the Third and Fourth Circuits' analysis: We agree with TWA and Leckie that the term "any interest in property encompasses those claims that arise from the property being sold. See TWA, 322 F.3d at 290. By analogy to Leckie (in which the relevant business was coal mining), "[appellants'] rights are grounded, at least in part, in the fact that [Old Chrysler's] very assets have been employed for [automobile production] purposes: if Appellees had never elected to put their assets to use in the [automobile] industry, and had taken up business in an altogether different area, [appellants] would have no right to seek [damages]." Leckie, 99 F.3d at 582. "To allow the claimants to assert successor liability claims against [the purchaser] while limiting other creditors' recourse to the proceeds of the asset sale would be inconsistent with the Bankruptcy Code's priority scheme." TWA, 322 F.3d at 292. Appellants ignore this overarching principle and assume that tort claimants faced a choice between the Sale and an alternative arrangement that would have assured funding for their claims. But had appellants successfully blocked the Sale, they would have been unsecured creditors fighting for a share of extremely limited liquidation proceeds. Given that billions of dollars of outstanding secured claims against Old Chrysler, appellants would have fared no better had they prevailed. COI v6-11-

124 Chrysler, 2009 U.S. App. Lexis at * As the Fourth Circuit found in Leckie's Smokeless Coal, which the Second Circuit cited approvingly in Chrysler, alleged statutory obligations also can be extinguished in a bankruptcy sale. In Leckie's, the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C (the "Coal Act"), imposed liability on each coal operator for both its retiree medical costs and a share of the costs of "orphan" retiree miners whose previous employers had gone out of business. See Leckie's, 99 F.3d at 576. The Coal Act also imposed obligations on successors in interest to these operators. See id. at 577. Two coal operators who had filed for bankruptcy brought declaratory judgment actions asserting that they could sell assets free and clear of Coal Act liabilities. See id. at Like the Boucher Plaintiffs argue in the Boucher Objection, the plaintiffs in Leckie's argued that the obligations under the Coal Act were not interests in property and, therefore, the debtor's assets could not be sold free and clear of Coal Act obligations under section 363(f) of the Bankruptcy Code. See id. at , The Fourth Circuit rejected this argument and found that because the Coal Act claims were grounded in the use of assets in coal mining, they should be considered interests in property for purposes of section 363(f) of the Bankruptcy Code. See id. at 586. The liabilities under the state dealer statutes that the Noncompliant Dealers are seeking to enforce against New Chrysler likewise are predicated on the fact that the Debtors' assets were used for automobile production prior to the consummation of the Fiat Transaction. These are exactly the type of liabilities that the Second Circuit (following the Third and Fourth Circuit precedent) found in Chrysler should be subject to free and clear protections; accordingly, the Noncompliant Dealers' arguments to the contrary should be rejected here. COI v6-12-

125 II. THE NONCOMPLIANT DEALERS ALSO ARE IN VIOLATION OF THE REJECTION ORDER The Noncompliant Dealers are violating the express provisions of the Rejection Order by seeking to enforce or restore their dealership rights. In its Objection, the Boucher Plaintiffs try to confuse the issue by making much of the fact that the Rejection Order entered by the Court omitted some of the provisions that the Debtors had originally requested concerning the consequences of the rejection of dealership agreements under section 365 of the Bankruptcy Code. See Boucher Objection at pp , The Creditors' Committee raises a similar point in its Limited Response. See Limited Response at pp. 2, 8. Although the Debtors agreed to simplify the form of order submitted to resolve certain objections, including by acknowledging that the dealers could file a proof of claim or administrative claim in this Court, the revisions to the form of Rejection Order did not open the door to lawsuits in all 50 states to challenge the impact of rejection or otherwise modify the protections embodied in the Sale Order. Indeed, the Debtors agreed to remove certain provisions from the Rejection Order (such as references to protections of New Chrysler as the purchaser) precisely because these provisions were already addressed by the previously entered Sale Order (which was approved after the original form of Rejection Order had been proposed). The Debtors' determination to streamline the form of Rejection Order submitted does not alter the fact that the Noncompliant Dealers are violating the provisions of the final, nonappealable Rejection Order approved by the Court. 6 This Court clearly found that bankruptcy 6 The Debtors' determination to simplify the proposed Rejection Order does not suggest that the Court overruled the deleted provisions. It did not. Likewise, notwithstanding the Creditors' Committee's statements that certain provisions were deleted as a result of "negotiations," it is not accurate to conclude that the deletion of certain words requires inferences about the impact of the Rejection Order. In many cases, the additional words were superfluous or clarifying and, in any event, all parties reserved their rights on these issues. The Debtors agree with the Creditors' Committee that the proper approach is to enforce the Rejection Order as entered. COI v6-13-

126 law preempted state dealer laws, finding that "[t]o the extent that any Dealer Laws conflict with the terms of this Order or the impact of the rejection of the Rejected Agreements under the Bankruptcy Code and applicable case law, such laws are preempted by the Bankruptcy Code, pursuant to the Supremacy Clause of the United States Constitution." Rejection Order at J. Further, paragraph 5 of the Rejection Order expressly provides that: Pursuant to section 365 of the Bankruptcy Code, as a result of the rejection of the Rejected Dealer Agreements, each Affected Dealer shall have no further rights (direct, indirect, contractual or otherwise) to act as an Authorized Dealer of the Debtors. As such, immediately as of the Rejection Effective Date, each such Affected Dealer is no longer authorized to, among other things: (a) (b) undertake any advertising, sales, repair or service of any of the Debtors' Products as an Authorized Dealer under the terms of the Rejected Dealer Agreements; hold itself out to any third party as an Authorized Dealer of the Debtors for any purpose; and (c) display, distribute or otherwise use any signage, promotional or other materials bearing or containing the Debtors' trademarks, tradenames and servicemarks, except that it may use the Debtors' descriptive brand and vehicle model names solely for the purpose of identifying and advertising its inventory for sale to the extent permitted by applicable law for a party that is not an Authorized Dealer of the Debtors. This provision clearly cuts off any rights of rejected dealers to act as "Authorized Dealers" of Chrysler products, including the right to sell cars, use Chrysler's intellectual property or to hold themselves out as an Authorized Dealer. The Noncompliant Dealers' actions constitute direct attacks on these established limitations. The Noncompliant Dealers are violating these provisions by seeking the ability to act as ongoing dealers and forcing New Chrysler to either: (a) supply vehicles to them using the manufacturing assets it acquired as part of the Fiat Transaction; or (b) suffer other adverse COI v6-14-

127 consequences due to its decision not to assume certain dealer agreements. The Noncompliant Dealers likewise seek to use state laws to undermine the impact of rejection directly contrary to the preemption rulings of this Court. One "impact" of the rejection, expressly recognized in the Rejection Order, was the extinguishment of the rejected dealers' "rights" to sell Chrysler vehicles or otherwise act as an Authorized Dealer. This necessarily cut off the dealers' "franchises" according to the very definitions relied upon by the Boucher Plaintiffs and incorporated into numerous state laws. See Wis. Stat (13) (defining "franchise" as the right to buy, sell, distribute or service a line make of motor vehicles that is granted to a motor vehicle dealer or distributor by, a manufacturer, importer or distributor). These rights were eliminated by rejection of the underlying dealer agreements as of June 9, 2009, before the closing of the Fiat Transaction. By the time that New Chrysler consummated the Fiat Transaction on June 10, 2009, the dealers had no further rights to buy, sell or distribute the vehicles to be manufactured and sold by New Chrysler. Despite the express terms of the Rejection Order to the contrary, the Noncompliant Dealers continue to claim they can assert rights as authorized dealers with ongoing rights. Moreover, they have sought to enforce these rights with respect to the Debtors and New Chrysler, including in some cases in a manner designed to reinstate their rejected dealer agreements with New Chrysler just as if they had been assumed and assigned. It is hard to imagine a more direct attack on the Rejection Order, the impact of rejection, the Debtors' rights under section 365 of the Bankruptcy Code, the limits on Assumed Liabilities approved by the Sale Order or literally decades of federal bankruptcy law and doctrine. If these dealers can succeed in such efforts, then the Debtors and New Chrysler would face similar attacks by all 789 rejected dealers. COI v6-15-

128 Other actions to enforce rejected dealers' state law rights as dealers after rejection are likewise preempted and directly violate the Rejection Order. In the Spitzer Objection, for example, Spitzer asserts that rejection does not cut off its rights as a dealer to seek to block New Chrysler's dealership relocations or openings under Ohio law. Yet, this Court expressly found in the Rejection Opinion that "[s]o-called 'blocking rights' which impose limitations on the power of automobile manufacturers to relocate dealers or establish new dealerships or modify existing dealerships over a dealer's objection, frustrate 365's purpose of giving a debtor the power to decide which contracts it will assume and assign or reject by allowing other dealers to restrict that power." Rejection Opinion at p. 32. Accordingly, Spitzer is directly violating the Rejection Order by attempting to bring a blocking protest as if it were an ongoing dealer for New Chrysler. In the Rejection Opinion, this Court also more broadly found that "to the extent injunctive relief against an OEM is available under the Dealer Statutes, that relief is preempted by the Debtor's power to reject under 365." Rejection Opinion at p. 32. The relief requested against New Chrysler by the Boucher Plaintiffs, for example, is injunctive relief against New Chrysler in its capacity as an original equipment manufacturer, and is clearly in violation of this Court's understanding of the "impact" of the Rejection Order that preempts state laws as set forth in this Court's own opinion. In an effort to justify the numerous actions in violation of the Rejection Order, the Noncompliant Dealers cite to language distinguishing "rejection" and "termination." But that distinction is designed to protect contract counterparties' ability to assert rejection damage claims against the debtor, not to allow counterparties (like the Noncompliant Dealers) to compel future performance of agreements against a purchaser in a section 363 sale when those agreements were never even assumed and assigned to the purchaser. See Cohen v. Drexel Burnham Lambert COI v6-16-

129 Group (In re Drexel Burnham Lambert Group, Inc.), 138 B.R. 637, 706 (Bankr. S.D.N.Y. 1992) ("The breach concept was invented to insure that the non-debtor party could assert a claim on a non-assumed contract by rendering irrelevant the absence of an actual breach by the debtor at the time of bankruptcy.") None of the arguments about rejection versus termination alter the terms or impact of the Sale Order or the Rejection Order. III. THE NONCOMPLIANT DEALERS ARE BARRED FROM ATTACKING THE PROVISIONS OF THE SALE ORDER OR THE REJECTION ORDER As described above, the Sale Order and the Rejection Order are clearly being violated by the Noncompliant Dealers. The Noncompliant Dealers spend a great deal of time in their Objections arguing that, as a matter of law, this Court could not approve the transfer of assets as part of the Fiat Transaction free and clear of their rights under various state dealer statutes. But all appeals of the Sale Order and the Rejection Order have now been denied or dismissed. Thus, this Court's findings are now binding. The Noncompliant Dealers' arguments therefore are barred by settled principles of res judicata, collateral estoppel and law of the case. A. The Litigation is an Impermissible Collateral Attack on the Prior Orders Just this summer, the Supreme Court considered the scope of collateral attacks on court orders in an opinion arising out of the Johns-Manville bankruptcy. See Travelers Indemnity Co. v. Bailey, 129 S.Ct. 2195, 2198, U.S. (2009). As part of its bankruptcy, Johns-Manville entered into settlements with certain of its insurance companies, including Travelers, pursuant to which the insurance companies contributed money to fund the Johns-Manville trust for asbestos victims and received in return a broad injunction against suits based on their relationship with Johns-Manville. Id. at These settlements and injunctions were approved by a set of orders issued by the bankruptcy court in 1986 (the "1986 Orders"). Id. at Over a decade after the confirmation of the Johns-Manville plan, asbestos plaintiffs started suing Travelers in COI v6-17-

130 state courts under two distinct theories. See id. at The first theory of the asbestos plaintiffs was that Travelers had violated state consumer protection statutes by conspiring with other insurers and asbestos manufacturers to hide the dangers of asbestos. See id. The second theory was that Travelers had violated a common-law duty to warn the public about the dangers of asbestos. See id. Like the Noncompliant Dealers, the plaintiffs tried to argue that Travelers was liable for its own acts and not those of Johns-Manville. The Supreme Court noted that "[i]t is undisputed that many of the plaintiffs seek to recover from Travelers, not indirectly for Manville's wrongdoing, but for Travelers' own alleged violations of state law." See id. However, all parties conceded that Travelers' knowledge concerning asbestos was based on its experience providing coverage to Johns-Manville. In 2002, Travelers sought to enjoin the various direct actions filed against it by claiming that such actions violated the injunctions contained in the 1986 Orders. See id. The bankruptcy court eventually issued a supplemental order (the "Clarifying Order"), which clarified that the injunction contained in the 1986 Orders barred the various direct actions against Travelers. On appeal, certain other insurers who were defendants in the various direct actions challenged the issuance of the Clarifying Order on the theory that it was an incorrect interpretation of the 1986 Orders and that the bankruptcy court did not have jurisdiction over the direct actions filed against Travelers. See id. at The Second Circuit reversed the Clarifying Order based on a belief that the bankruptcy court did not have jurisdiction to enter the requested injunction. See id. In a 7-2 opinion, the Supreme Court reversed the Second Circuit. The first question that the Supreme Court confronted in its opinion was how broadly to read the 1986 Orders. The 1986 Orders enjoined any "'claims, demands, allegations, duties, liabilities and obligations' against Travelers, known or unknown at the time, 'based upon, arising out of or relating to' Travelers COI v6-18-

131 Insurance Coverage of Manville." Id. at 2203 (quoting the 1986 Orders). The parties challenging the Clarifying Order argued that the language in the 1986 Orders should be read narrowly to cover only derivative claims and not reach the direct actions against Travelers. The Supreme Court disagreed, finding that the language in the 1986 Orders was not so limited. Id. at In fact, the Supreme Court stated that "[i]f it is black-letter law that the terms of an unambiguous private contract must be enforced irrespective of the parties' subjective intent, see 11 R. Lord, Williston on Contracts 30:4 (4th ed. 1999), it is all the clearer that a court should enforce a court order, a public government act, according to its unambiguous terms." Id. The second issue that the Supreme Court confronted was a claim that the bankruptcy court did not have jurisdiction to enter the Clarifying Order. The Supreme Court noted that "[t]he answer here is easy: as the Second Circuit recognized, and respondents do not dispute, the Bankruptcy Court clearly had jurisdiction to interpret and enforce its own orders." Id. The same principle here allows this Court to enforce the Sale Order and the Rejection Order. Despite the broad authority of a bankruptcy court to interpret and enforce its own orders, the Second Circuit in Travelers questioned whether the bankruptcy court had jurisdiction in the first instance to issue the broad injunction that was part of the 1986 Orders and found that it did not. See id. at The Supreme Court reversed, finding that "[w]e think, though, that it was error for the Court of Appeals to reevaluate the Bankruptcy Court's exercise of jurisdiction in 1986." Id. "Once the 1986 Orders became final on direct review (whether or not proper exercises of bankruptcy court jurisdiction and power), they became res judicata to the parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose." Id. at COI v6-19-

132 As set forth above, the plain language of the Sale Order and the Rejection Order bar the pursuit of any Claims, including successor or transferee liabilities arising under state dealer statutes, and these orders should be enforced against the Noncompliant Dealers. With the exhaustion of appeals on the Sale Order and the Rejection Order, the Noncompliant Dealers are no longer permitted to challenge the provisions of these orders. Their efforts to reargue these issues is a prohibited collateral attack on these orders. See id. at 2205; see also FutureSource LLC v. Reuters Ltd., 312 F.3d 281, (7th Cir. 2002) (finding effort to assert a license in assets sold free and clear was an impermissible collateral attack on sale order). B. The Noncompliant Dealers Cannot Challenge the Provisions of the Sale Order and the Rejection Order in Later Litigation In essence, the Noncompliant Dealers are merely rearguing the same issues that the Court already has heard and decided. Like other court orders, sale orders can have preclusive effects in subsequent litigation. See, e.g., Winget v. JP Morgan Chase Bank, N.A., 537 F.3d 565, (6th Cir. 2008) (finding sale order acted as a res judicata bar to claims against a secured lender); Robertson v. Isomedix (In re Int'l Nutronics), 28 F.3d. 965, (9th Cir. 1994) (finding sale order acted as a res judicata bar to antitrust claims). In addition, under Second Circuit law, the law of the case doctrine "counsels a court against revisiting its prior rulings in subsequent stages of the same case...." Ali v. Mukasey, 529 F.3d 478, 490 (2d Cir. 2008). Under Second Circuit law, "to prove that a claim is precluded under [res judicata], 'a party must show that (1) the previous action involved an adjudication on the merits; (2) the previous action involved the [parties] or those in privity with them; [and] (3) the claims asserted in the subsequent action were, or could have been raised in the prior action.'" Pike v. Freeman, 266 F.3d 78, 91 (2d Cir. 2001) (quoting Monahan v. New York City Dep't of Corr., 214 F.3d 275, (2d Cir. 2000)). As described above, both the Sale Order and the Rejection Order COI v6-20-

133 were adjudications on the merits in proceedings in which numerous dealers appeared, including certain of the Noncompliant Dealers. 7 The Motion to Enforce describes in detail how each of the claims being brought by the Noncompliant Dealers mirror the objections they made to the Sale Order and the Rejection Order, which were expressly overruled by these orders. As a result, the suits brought by the Noncompliant Dealers are now barred by operation of res judicata. Collateral estoppel or issue preclusion also bars the re-litigation of issues of law or fact that were previously litigated. See Ali, 529 F.3d at 489. Under Second Circuit precedent, "collateral estoppel applies when: (1) the issues in both proceedings are identical, (2) the issues in the prior proceeding was actually litigated and actually decided, (3) there was a full and fair opportunity for litigation in the prior proceeding, and (4) the issues previously litigated were necessary to support a valid and final judgment on the merits." Id. The issue of whether New Chrysler acquired assets in the Fiat Transaction free and clear of successor or transferee liabilities is identical in the litigation concerning the Sale Order and the litigation brought in other forums by the Noncompliant Dealers, which satisfies the first prong of the collateral estoppel test. That issue also was decided by this Court on notice to the effected parties, which decision was expressly upheld by the Second Circuit, in satisfaction of the second and third prongs. And the findings on successor or transferee liability were necessary to accomplish the sale, which was conditioned on the transfer of assets being free and clear of all Claims. Likewise, the issues relating to the preemptive impact of rejection were fully litigated and decided in the Rejection Order and Rejection Opinion as essential to providing the requested relief and addressing the objections filed. As a result, the claims against New Chrysler brought by the Noncompliant Dealers also are barred by the doctrine of collateral estoppel. 7 All of the Noncompliant Dealers were provided with notice and an opportunity to be heard with respect to both the Sale Order and the Rejection Order. COI v6-21-

134 IV. THE NONCOMPLIANT DEALERS ARE IN VIOLATION OF THE AUTOMATIC STAY In addition to violating the Sale Order and the Rejection Order, the Noncompliant Dealers have violated the automatic stay imposed by section 362 of the Bankruptcy Code. The action by Spitzer is the most obvious example of this because Spitzer expressly named the Debtors in its protest and seeks relief under its previously rejected dealer agreement with the Debtors. That action clearly violates the automatic stay. 8 By contrast, in the Boucher Objection, the Boucher Plaintiffs argue that they are not in violation of the automatic stay because they seek relief only against New Chrysler. See Boucher Objection at pp. 8-10, Crain makes a similar argument in the Crain Objection. See Crain Objection at pp These arguments, however, do not address the stay violations described by the Debtors and New Chrysler in the Motion to Enforce. The failure to name the Debtors by itself is not determinative. Although the Noncompliant Dealers in Boucher and Crain may not name the Debtors expressly in their complaints, the litigation they bring is clearly based on rights they allege to have under their dealer agreements with the Debtors and this litigation could have an adverse impact on the Debtors if it continues. 9 The Boucher Plaintiffs and Crain also ignore the fact that their actions pose a direct challenge to the Debtors with respect to the claims process in these cases. Under section 365(g) of the Bankruptcy Code, the rejection of a contract is treated as a breach of the contract immediately prior to the Petition Date. Under section 502(g) of the Bankruptcy Code, this claim 8 9 In its Limited Response, the Creditors' Committee incorrectly state that none of the actions at issue named the Debtors as defendants. Moreover, even after rejection, to the extent that any of the Debtors' rights survive, the agreements with the Noncompliant Dealers remain property of the Debtors' estates. See Medical Malpractice Ins. Ass'n v. Hirsch (In re Lavigne), 114 F.3d 379, (2d Cir. 1997) (finding that estate could exercise tail insurance purchase option in rejected insurance contract). COI v6-22-

135 shall be treated the same as if it arose prior to the Petition Date. As a result, the damages for rejection of a dealership agreement are prepetition claims subject to the automatic stay and the claims allowance process in these cases. Litigation to determine the amount and allowance of such prepetition claim even under the guise of litigating against a nondebtor would violate the automatic stay in these cases because of the risk that the Debtors may be bound by adverse determinations in such litigation. See Lomas v. Northern Trust Co., 117 B.R. 64, 68 (S.D.N.Y. 1990) (issuing an injunction based on section 362 where litigation against nondebtors likely would bind debtors under collateral estoppel). If the Noncompliant Dealers are permitted to litigate issues potentially impacting the damages for the rejection of their dealer agreements against New Chrysler, the Debtors may be forced to intervene not only in the actions brought by the Noncompliant Dealers, but also in the multitude of actions that other dealers would undoubtedly bring if the Motion to Enforce is denied. Requiring the Debtors to appear all over the country in litigation of this type is exactly the sort of activity the automatic stay is designed to prevent, and the Court should not permit this to occur. Moreover, even after rejection, to the extent that any of the Debtors rights survive, the agreements with the Noncompliant Dealers remain property of the Debtors' estates. See Medical Malpractice Ins. Ass'n v. Hirsch (In re Lavigne), 114 F.3d 379, (2d Cir. 1997) (finding that estate could exercise tail insurance purchase option in rejected insurance contract). To address these issues, the Rejection Order specifically provided that: This Court shall retain jurisdiction to resolve all matters relating to the implementation, enforcement and interpretation of this Order. Without limiting the foregoing, the Court also shall retain jurisdiction with respect to this Order and the Rejected Agreements over (a) any actions by the Affected Dealers against the Debtors or the property of their estates, including, without limitation, any actions in violation of the automatic stay under section 362 of the Bankruptcy Code; and (b) any Rejection Damages Claims or other COI v6-23-

136 claims alleged against the Debtors' estates, and any objections or defenses thereto. Rejection Order at p. 6; 7. Under these circumstances, the litigation by the Noncompliant Dealers to assert rights under these contracts is in violation of section 362 of the Bankruptcy Code. See B.N. Realty Assoc. v. Lichtenstein, 238 B.R. 249, 258 (S.D.N.Y. 1999) ("the terms of Section 365 by itself do not provide relief from the automatic stay"). V. THE BANKRUPTCY COURT HAS JURISDICTION OVER THE MOTION TO ENFORCE In the Boucher Objection, the Boucher Plaintiffs allege that this Court does not have jurisdiction to hear the motion to enforce under a theory that there is no "related to" jurisdiction over the Wisconsin Civil Action or the Wisconsin Administrative Action. That is clearly erroneous. Indeed, not only does the Court have "related to" jurisdiction, but this Court has core jurisdiction under 28 U.S.C. 157(b)(1) to interpret and enforce the Sale Order and the Rejection Order. See Travelers, 129 S.Ct. at 2205; Jamaica Shipping Co. Ltd. v. Orient Shipping Rotterdam (In re Millennium Seacarriers, Inc.), 458 F.3d 92, 95 (2d Cir. 2006); see also Allegheny Univ. Hosps. v. Nat'l Union of Hosp. & Health Care Employees (In re Allegheny Health, Educ. and Research Found.), 383 F.3d 169, 176 (3d Cir. 2004); South Motor Co. of Dade County v. Carter-Pritchett-Hodges, Inc. (In re MMH Automotive Group, LLC ), 385 B.R. 347, 355 (Bankr. S.D. Fla. 2008); NWL Holdings, Inc. v. Eden Ctr., Inc. (In re Ames Dep't Stores, Inc.), 317 B.R. 260, (Bankr. S.D.N.Y. 2004). The jurisdiction of the court to enforce its orders is not changed where the dispute is facially between two non-debtors. See Luan Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223, 230 (2d Cir. 2002) (finding post- COI v6-24-

137 confirmation jurisdiction over a dispute between non-debtor parties over the effect of a sale order). 10 For example, courts have previously determined that proceedings similar to that present here are proceedings "arising in" a bankruptcy case, for which bankruptcy courts retain jurisdiction. See Ames Dep't Stores, Inc., 317 B.R. at 269. In Ames, the assignee of a chapter 11 debtor's commercial lease, sought an injunction from the bankruptcy court to prevent the lessor from terminating the lease. Another judge in this district found that subject matter jurisdiction to issue the injunction was not based on "related to" jurisdiction; rather, there was "arising in" jurisdiction, by reason of the court's earlier orders in the case and the need to enforce them. Id. at 269. The bankruptcy court in Ames pointedly noted that circuit courts of appeals use a broad standard for "arising in" jurisdiction, finding that a proceeding "arises in" a bankruptcy case when it would have no practical existence but for the bankruptcy. See id. (citing Bergstrom v. Dalkon Shield Claimants Trust (In re A.H. Robins Co., Inc.), 86 F.3d 364, 372 (4th Cir. 1996)); see also Grausz v. Englander, 321 F.3d 467, 471 (4th Cir. 2003); Poplar Run Five Ltd. P'ship v. Virginia Electric & Power Co. (In re Poplar Run Five Ltd. P'ship), 192 B.R. 848, 857 (Bankr. E.D. Va. 1995). Accordingly, the court in Ames held that, although the debtor was not involved in the dispute and would not be affected by the outcome, the bankruptcy court had jurisdiction because the case involved efforts to "implement, gain the fruits of, and to enforce orders of the bankruptcy court...." Ames, 317 B.R. at 269; see also In re Petrie Retail, Inc., 304 F.3d at 10 In paragraph 46 of the Boucher Objection, the Boucher Plaintiffs claim that the sale of property by the Debtors terminates this Court's jurisdiction. The Debtors and New Chrysler note that all of the cases cited for this proposition are from the Seventh Circuit and not the Second Circuit and that following the Supreme Court's opinion in Traveler's, the Seventh Circuit's abnormally constrained view of a bankruptcy court's jurisdiction to enforce a sale order likely is no longer good law. COI v6-25-

138 (finding that a postpetition dispute between two non-debtors over pre-petition lease was a core proceeding, inter alia, because the dispute "was based on rights established in the sale order" and was "uniquely affected by and inextricably linked to the bankruptcy court's sale order") (internal quotation marks omitted); In re Millennium Seacarriers, Inc., 2004 WL at *4 (S.D.N.Y. Jan. 14, 2004) (finding jurisdiction in the bankruptcy court to hear a dispute between the parties involving the resolution of rights enumerated in a sale order with respect to the property subject to the sale). More specifically, it is clear that a bankruptcy court has subject matter jurisdiction to interpret and enforce the "free and clear" provisions in a sale order for the benefit of a purchaser. In In re Eveleth Mines, L.L.C., 318 B.R. 682 (8th Cir. B.A.P. 2004), the purchaser of a chapter 11 debtor's taconite production facility moved to enforce "free and clear of interest" language in the bankruptcy court's sale order by restraining the state taxing authority from using the debtor's taconite production prior to the sale in calculating production tax imposed on the purchaser after the sale. Applying the reasoning in Ames, the Bankruptcy Appellate Panel for the Eighth Circuit held that since the purchaser's motion to enforce the sale order arose in a proceeding under title 11, and since the purchaser sought to gain the fruits of enforcement of that order, the bankruptcy court had jurisdiction to consider the motion. See id. at 687. The Bankruptcy Appellate Panel held, therefore, that the bankruptcy court had subject matter jurisdiction to interpret and enforce the "free and clear of interests" language in its prior sale order. See id. at 687. Similarly, courts have found that a bankruptcy court has jurisdiction to stop the pursuit of products liability claims against the purchaser of assets in a free and clear sale. See In re Paris Indus. Corp., 132 B.R. 504, (D. Maine 1991) (holding that the bankruptcy court had ancillary jurisdiction to enjoin products liability action against purchaser of COI v6-26-

139 debtor-manufacturer's assets, in order to enforce language in the order approving the sale as one "free and clear" of all liability arising out of prior sales of debtor's products). Under these precedents, this Court clearly has jurisdiction to enforce its prior orders and take steps to stop the Noncompliant Dealers' pursuit of litigation in violation of these orders. VI. THE WMVDL IS PREEMPTED AND 28 U.S.C. 959 DOES NOT FORCE THE DEBTORS AND NEW CHRYSLER TO COMPLY WITH THE WMVDL A central theme of the Boucher Objection is a claim that section 365 does not preempt the successor liability provisions of the WMVDL, and that 28 U.S.C. 959 requires ongoing compliance with state dealer laws even in the face of the rejection of the underlying agreements and the free and clear sale of assets. But the Court already decided the same or similar arguments. After extensive briefing and argument, this Court found that the Bankruptcy Code does preempt the state dealer statutes and that 28 U.S.C. 959 did not alter that result. Notably, the Boucher Plaintiffs do not even address the preemptive effect of section 363 of the Bankruptcy Code. The Debtors already argued at length in connection with the Sale Order and the Rejection Order that preemption applies. The Debtors' position on preemption and the inapplicability of 28 U.S.C. 959 were addressed in the Rejection Motion, the Debtors' Supplemental Memorandum of Law Supporting Sale Motion (Docket No. 2130) and the Consolidated Reply of Debtors and Debtors in Possession to Responses to Omnibus Motion of Debtors and Debtors in Possession for an Order, Pursuant to Sections 105, 365 and 525 of the Bankruptcy Code and Bankruptcy Rule 6006, (A) Authorizing the Rejection of Executory Contracts and Unexpired Leases with Certain Domestic Dealers and (B) Granting Certain Related Relief (Docket No. 3166). (See Supp. Memo of Law at pp ; Consolidated Reply at pp ). The Debtors incorporate those arguments herein by reference. COI v6-27-

140 VII. THE AWARD OF CONTEMPT SANCTIONS AGAINST THE NONCOMPLIANT DEALERS IS APPROPRIATE Under Second Circuit law, to receive fees for the Noncompliant Dealers' contempt, the Debtors and New Chrysler must show: (1) an order is clear and unambiguous; (2) proof of noncompliance is clear and concise; and (3) the party against whom contempt is sought did not diligently attempt to comply with the court's order. See Balaber-Strauss v. Markowitz (In re Frankel), 192 B.R. 623, 628 (Bankr. S.D.N.Y. 1996). Further, under Second Circuit law, a violation of the automatic stay is treated like a violation of a court order. See Bartel v. Eastern Airlines, 1998 U.S. App. Lexis 71 at *6 (2d Cir. Jan. 6, 1998). Once the party requesting contempt shows a clear violation of the court order "the burden must shift to the breaching party to establish as an affirmative defense that he was incapable of compliance, through no fault of his own and despite diligent efforts to comply." Frankel, 192 B.R. at 628. The purpose of awarding fees as a contempt sanction is to compensate a party for the expenses incurred in requesting enforcement of a court's order. See Nisselsen v. Empyrean Inv. Fund, L.P. (In re MarketXT Holdings Corp.), 2007 U.S. Dist. Lexis at *7 (S.D.N.Y. Apr. 3, 2007). Under Second Circuit law, a court can award fees without a finding of willfulness where one party forces the other to incur significant litigation expenses. See Shady Records, Inc. v. Source Enter., 351 F.Supp.2d 64, 73 (S.D.N.Y. 2004) In the Boucher Objection, the Boucher Plaintiffs try to argue that the award of contempt sanctions against them is not appropriate because they "brought the Subject Actions based on a good faith belief that neither this Court's orders nor the Bankruptcy Code prohibiting them from seeking to enforce the WMVDL against New Chrysler, a non-debtor in this proceeding." Boucher Objection at p. 32; 66. As described above, the text of the Sale Order and the Rejection Order clearly prohibits the conduct in question and the Sale Opinion, the Rejection COI v6-28-

141 Opinion and the Second Circuit's opinion in the appeal of the Sale Order were all clear that the sale of assets as part of the Fiat Transaction was being made free and clear of the liabilities of rejected dealers. Given the clarity of the record and the fact that the Noncompliant Dealers have continued to ignore the prior rulings of this Court and the Second Circuit after the filing of the Motion to Enforce, the Debtors and New Chrysler submit that the award of contempt sanctions is appropriate. Spitzer, for instance, filed its protest against the Debtors and specifically sought to enforce "blocking" rights that this Court expressly found were preempted. Boucher filed not one, but two actions, in violation of the Court's orders and Crain did the same thing. Both continued to prosecute their filings after New Chrysler and the Debtors made clear that the actions violated this Court's orders. Contempt relief is therefore appropriate. CONCLUSION For the reasons set forth herein and in the Motion to Enforce and the additional reasons and evidence to be submitted on the record at the hearing on the Motion to Enforce, the Debtors respectfully submit that the Court should (a) overrule all of the Objections and the Limited Response and (b) grant the relief requested in the Motion to Enforce in its entirety As noted in footnote 2 above, because Painter's has dismissed its action in Utah, the Debtors are revising the proposed form of order granting the Motion to Enforce to exclude Painter's from the definition of Noncompliant Dealers. COI v6-29-

142 Dated: August 25, 2009 New York, New York Respectfully submitted, /s/ Corinne Ball Corinne Ball Veerle Roovers JONES DAY 222 East 41st Street New York, New York Telephone: (212) Facsimile: (212) David G. Heiman JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio Telephone: (216) Facsimile: (216) Jeffrey B. Ellman JONES DAY 1420 Peachtree Street, N.E. Suite 800 Atlanta, Georgia Telephone: (404) Facsimile: (404) ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION COI v6-30-

143 /s/ Robert D. Cultice Robert D. Cultice WILMER CUTLER PICKERING HALE AND DOOR LLP 60 State Street Boston, Massachusetts Telephone: (617) Facsimile: (617) Mark T. Clouatre Gwen J. Young WHEELER TRIGG O'DONNELL LLP 1801 California Street, Suite 3600 Denver, Colorado Telephone: (303) Facsimile: (303) ATTORNEYS FOR CHRYSLER GROUP LLC COI v6-31-

144 EXHIBIT B [Painter s Sun December 17, 2009, Protest] WAI v4

145

146

147

148

149

150

151

152

153

154

155

156

157