Frenemies at Chrysler

When Corinne Ball of Jones Day and Thomas Lauria of White & Case LLP recently squared off in the Chrysler LLC bankruptcy -- Ball is debtor counsel, while Lauria represents the so-called non-TARP lenders -- it wasn't the first time the two were adversaries.

The lawyers found themselves at odds a little more than seven years ago in the Chapter 11 case of WilTel Communications Group Inc. Energy company Williams Cos. spun off its telecom subsidiary, then called Williams Communications Group Inc., in 2001. But on April 22, 2002, under the weight of $6 billion in debt, WilTel filed for bankruptcy.

Lauria represented Williams Cos., and Ball provided counsel to WilTel. According to an attorney involved in that case, the two lawyers battled over several issues. One involved the spinoff occurring not long before WilTel had to file for bankruptcy, leading creditors to challenge Williams Cos.' motives. Another sticking point was a set of structured notes issued by WilTel that Williams Cos. guaranteed. The attorney says there was uncertainty over whether Williams Cos. would honor its guarantee in full, since the company's gas-trading operation was taking a hit from Enron Corp.'s collapse.

According to the attorney, negotiations among Lauria and Ball and other parties in the case dragged on endlessly, but at the eleventh hour, an agreement was reached. Leucadia National Corp. made a $150 million equity investment in WilTel and paid Williams Cos. $180 million to settle $2.4 billion in claims. In return, Leucadia got 45% of WilTel.

Ball and Lauria could not be reached for comment, but they've already avoided one battle in the Chrysler case. Lauria's clients, which are hedge funds and other lenders that didn't participate in the federal government's Troubled Asset Relief Program, on May 8 dropped their opposition to Chrysler's debtor-in-possession financing and its proposed sale to Italy's Fiat SpA. That fight could have been a bruiser.