## Facts

- Plastech Engineered Products, Inc. and affiliates (Plastech) operated as a tier-1 automotive supplier producing plastic components for OEM customers, including Chrysler LLC (Chrysler).
- Chrysler and Plastech entered tooling arrangements in which Chrysler funded specialized tooling used to manufacture Chrysler parts at Plastech facilities.
- The parties executed a tooling acknowledgment stating Chrysler owned the tooling and could demand immediate possession.
- Plastech’s financial condition worsened in late 2007 and early 2008, raising concerns about continued operations and supply continuity.
- On January 22, 2008, Chrysler entered a Second Financial Accommodation Agreement, advancing $10.7 million in payables and reaffirming Chrysler’s tooling acknowledgment and claimed right to immediate possession.
- On January 31, 2008, Chrysler terminated its contracts with Plastech and demanded return of all Chrysler tooling; Chrysler also filed a state-court action seeking immediate delivery.
- On February 1, 2008, Plastech filed voluntary Chapter 11 petitions, triggering the automatic stay under 11 U.S.C. § 362.
- Chrysler filed an emergency motion for relief from the automatic stay to repossess the tooling and also filed an adversary proceeding seeking a preliminary injunction requiring cooperation with tooling removal.
- Plastech, secured creditors, and the unsecured creditors’ committee opposed, contending that immediate removal would cripple operations, harm reorganization prospects, and reduce value for creditors.
- The bankruptcy court held evidentiary hearings on February 14–15, 2008, and issued a written opinion on February 19, 2008.

## Issues

1. Whether Chrysler showed entitlement to relief from the automatic stay under 11 U.S.C. § 362(d) to remove tooling located at the debtor’s facilities.
2. Whether Chrysler satisfied the requirements for a preliminary injunction compelling access to and removal of the tooling and restraining interference by the debtor.

## Decision

- The court denied Chrysler’s motion for relief from the automatic stay.
- The court denied Chrysler’s motion for a preliminary injunction in the related adversary proceeding.
- The court left the tooling in place during the early stage of the Chapter 11 case, subject to further bankruptcy-court supervision.

## Legal Principles

- Relief from the automatic stay under 11 U.S.C. § 362(d) requires a showing of statutory grounds (including “cause”) and is evaluated in light of Chapter 11’s objective of preserving the estate and the possibility of effective reorganization.
- Even where a movant asserts strong contractual rights or ownership claims, a bankruptcy court may deny immediate possession-based remedies if enforcement would materially damage the debtor’s operations and threaten reorganization at the outset of the case.
- A preliminary injunction requires consideration of likelihood of success, irreparable harm, balance of harms, and the public interest; the balance of harms and reorganization consequences may defeat injunctive relief in a supply-chain debtor case.
- The automatic stay functions to prevent unilateral creditor action and preserve the status quo so disputes over property and contract rights can be resolved through the bankruptcy process.

## Conclusion

The bankruptcy court refused to permit Chrysler to immediately remove tooling from Plastech’s plants, holding that, in an early-stage Chapter 11 case, maintaining the status quo and protecting the debtor’s ability to continue operating and preserve value for the creditor body outweighed Chrysler’s request for immediate stay relief and injunctive enforcement of its claimed tooling rights.


Chrysler LLC v. Plastech Engineered Prods., Inc. (In re Plastech Engineered Prods., Inc.), 382 B.R. 90 (Bankr. E.D. Mich. 2008)