Personal injury lawyers get two seats on Chrysler's unsecured creditors' committee

By Steve Korris | May 21, 2009

NEW YORK - Chrysler workers, dealers, suppliers and lenders anticipate heavy losses from the automaker's bankruptcy, but personal injury lawyers anticipate a $217 million windfall.

On May 5, U.S. Bankruptcy Trustee Diana Adams of New York appointed two personal injury plaintiffs, Desiree Sanchez and Patricia Pascale, to a committee of unsecured creditors so their lawyers can press personal injury claims against Chrysler.

The law firm that represents Sanchez, Schnader Harrison Segal & Lewis of Philadelphia, estimates outstanding personal injury claims against Chrysler at $650 million.

Benjamin Deutsch of the Schnader firm sent a letter to Adams on May 4 claiming to represent a committee with more than 150 members.

He filed the letter with a motion to create a special personal injury committee. The motion did not identify the firms representing the interests of the 150 members or account for the amount of their claims.

Adams promptly gave the Schnader firm more than it asked for by granting it and the Novato, Calif. firm that represents Pascale, Brayton Purcell, two of the 11 seats on the unsecured creditors' committee the next day.

The United Auto Workers union gets one seat on the committee.

No longer needing a separate special committee, the Schnader firm ON May 8 withdrew the motion to create a personal injury committee.

The unsecured creditors' committee also includes the U.S. Pension Benefit Guarantee Corp. and seven of the many companies with standing bills that haven't been paid.

U.S. Treasury officials who have announced other aspects of a reorganization plan have kept silent about the cost of settling lawsuits. Treasury has not answered a May 11 inquiry about the cost of pending litigation.

Adams's office referred a May 18 call to a Washington spokeswoman whose telephone message indicated she didn't work that day.

The prospect of a nine-digit payout for personal injury claims contrasts with the fates of other parties.

Chrysler has laid off workers, shut down dealers, obtained concessions from the union on health care, and stopped paying supplier invoices and utility bills.

Lenders that received federal bailout funds expect partial recovery, while lenders that didn't get bailout funds protest that their $295 million investment will vanish.

Retirees who didn't belong to the union likewise protest that their health insurance will disappear.

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