Most lawyers who take on major bankruptcy cases have the time and leeway to help troubled companies restructure in Chapter 11. Corinne Ball, the lead lawyer in Chrysler’s bankruptcy case, had neither.
Learning only weeks before Chrysler sought bankruptcy protection that the company would wind up in court, Ms. Ball led a team of more than 70 lawyers from Jones Day through one of the most important — and quickest — restructurings on record.
On Wednesday, the Italian automaker Fiat took management control of a new version of Chrysler, called the Chrysler Group. The step came only 42 days after Chrysler sought bankruptcy protection on April 30.
Fiat initially will hold 20 percent of Chrysler, whose other stakeholders include a union health care trust, and the Canadian and American governments.
Speaking for the first time since the sale, Ms. Ball said Friday that she and other lawyers faced strict timelines and budgets dictated by President Obama’s automotive task force, both in the days before the bankruptcy filing and after the case went to court.
The company and its advisers worked under the presumption that the government was prepared to let the carmaker liquidate if the company and its lawyers failed to meet tight deadlines — something that senior administration officials confirm.
“It’s not beyond the pale to think that they would have let Chrysler go,” Ms. Ball said.
Ms. Ball and Jones Day were brought in as advisers to Chrysler late last year before the company, which failed to win a Congressional bailout, was granted a lifeline in the final days of the Bush administration.
Chrysler executives initially tried to convince the government a bankruptcy filing was not necessary if debtholders, suppliers and the United Automobile Workers union all made concessions.
To many inside the company, a Chapter 11 filing would spell almost certain death, given the perception that customers would shun vehicles sold by a bankrupt carmaker.
“The company was working very hard to stay out,” said Thomas F. Cullen Jr., who assisted Ms. Ball with the case.
But the government, which had brought in advisers including the investment banker Steven Rattner and Ron Bloom, a restructuring expert who had worked with the United Steelworkers union, rejected a restructuring plan that would have kept Chrysler out of court. It gave the company just one month to come up with another proposal.
In early March, the Obama administration offered an alternative: taking Chrysler into court for what was called a “quick rinse,” with its assets sold to create the new company, and the government providing the financing that would be required.
They were initially shocked by the idea, but “in some ways we were relieved,” Ms. Ball said. “It changed everything dramatically.”
The bankruptcy filing, however, was preceded by weeks of what Ms. Ball described as “smash-mouth,” around-the-clock negotiations, with Jones Day lawyers pushing the government for more concessions, especially to Chrysler’s lenders. Major banks eventually agreed to support a plan to reduce the company’s debt, but smaller lenders balked.
For lawyers used to far more time — bankruptcy cases generally take months or years to play out — the situation was jarring.
Getting the case ready meant long days of meetings in Washington, New York City and Michigan, some stretching until 5 a.m. In one instance, Ms. Ball said, her hotel gave away her room.
“If we were going to do this fast, we needed to do dozens of things at the same time,” Mr. Cullen said. “We needed to have a safecracker’s nerve.”
Added Ms. Ball: “The auto task force pushed everyone out to the limit,” she said. “Us, the U.A.W., everyone.”
Chrysler’s quick bankruptcy case has been seen as a template for General Motors, itself now in bankruptcy and trying a similar restructuring plan.
But the court hearings in the two cases have unfolded very differently: Chrysler’s first few hearings were all-day affairs, with multiple company executives taking the stand, while G.M.’s only hearing, held June 1, the day it sought court protection, lasted two hours with a minimum of fuss.
Ms. Ball said there was a big difference between the G.M. case, overseen by an experienced bankruptcy lawyer, Harvey R. Miller of Weil, Gotshal & Manges, and Chrysler’s trip through bankruptcy. “G.M. and Weil have the luxury of being too big to fail,” she said. “Chrysler didn’t have that luxury.”
