Prof. Todd Zywicki is a noted and justly celebrated scholar of American bankruptcy law, but in his May 13 op-ed "Chrysler and the Rule of Law," he does not make his case for the proposition that the secured creditors have been unfairly treated in the Chrysler bankruptcy, or that the Obama administration challenges the rule of law.

According to Mr. Zywicki, the secured creditors, through "bare-knuckle tactics," are being made to agree to 30 cents on the dollar in violation of the absolute priority rule. But any bankruptcy lawyer knows that absolute priority applies only if a creditor votes "no" on the plan. If the secured creditors are agreeing to take 30 cents on the dollar, then by definition the concept of absolute priority is irrelevant.

Prof. Zywicki also claims that the Obama administration is denying creditors the right to vote by sponsoring what is known as a 363(b) sale, prior to confirmation of a plan. But this is standard practice in the Second Circuit Bankruptcy Courts and has been affirmed on appeal repeatedly for the last quarter century. It is not an attack on the rule of law to do what the Second Circuit Court of Appeals has so often declared to be appropriate.

The secured creditors are, after all, consenting to their treatment. Surely we can depend on the vulture funds that have bought up Chrysler's secured debt to see to their own long-term interest. Given that no one wants to buy Chrysler cars (which is why Chrysler is bankrupt in the first place), a 30% payout might be a good deal that turns a nice profit for the vulture funds.

Prof. David Gray Carlson
Cardozo School of Law
New York

Congrats to Todd Zywicki for having the guts and brains to call President Barack Obama's takeover of Chrysler what it really is: government thuggery. It would have been easier to accept if the motive hadn't been so blatant, namely, political payback for bringing out the union vote. It would have been easier to accept if there hadn't been a complete usurpation of a centuries-old body of law which forbade such an arbitrary interdiction of government power. And it would have been more palatable if legitimate creditors had been crammed down by others who somehow outmaneuvered them.

But, no, this was government intervention at its worst, an arrogant act of "don't get in our way" which will likely be repeated at Mr. Obama's pleasure. And this guy taught law?

Richard Klitzberg
Boca Raton, Fla.

Mr. Zywicki warns that the next company, maybe a pharmaceutical company, might be forced into an asset conveyance to obtain government funding. If that is so, then the Chrysler bankruptcy will have an unintended good consequence, namely to warn every other business in America that it has no business looking for a government bailout.

Mark Maisonneuve
Eastpointe, Mich.

Thousands of companies will not get financing because of the administration's actions with Chrysler. What financial adviser will recommend any but the strongest bonds? What bank will loan money to companies where this could happen? What pension fund, institutional investor, etc., will buy other than the most secure bonds?

Richard Fausett
Rancho Mirage, Calif.

The rule of law is vital not only to economic efficiency, the point advanced by Prof. Zywicki, but also to the fabric of our society. By appearing on national television to give a gratuitous, heavy-handed lashing to those Chrysler lenders who chose to rely on the law, our president functioned as teacher. He taught our populace that the ends justify the means; legal rights can be ignored when inexpedient, or when inconsistent with popular views or constituent politics; ad hominem attacks can justify government action; and public vilification and intimidation tactics work. One need not be a lender to be apprehensive about where such lessons can take us.

Mark D. Brodsky
New York