Chrysler lawyers to judge: pay us first

NEW YORK (Reuters) - Chrysler's lawyers have taken the unusual step of asking a judge to give their fees special priority, which attorneys on the case said suggests unsecured claims such as trade debts won't be paid.

Chrysler has proposed selling its healthiest operations to a new company owned by a union-aligned trust, Italian carmaker Fiat and the Canadian and U.S. governments.

The assets left after the Fiat sale would remain in bankruptcy to settle outstanding claims, which includes some fees for lawyers and advisers.

Chrysler's lawyers from Jones Day, have asked for "superpriority" in determining the order of payment, as did Chrysler's financial advisers, Capstone Advisory Group. In court documents, the firms said they are going to incur large fees and as such would be extending Chrysler significant amounts of credit.

"I've never heard of asking for that explicitly," said David Skeel, a law professor with the University of Pennsylvania, who has written a history of bankruptcy. He said legal fees are always implicitly assumed to be the "first among equals."

Skeel said attorneys generally don't need to ask for such priority for their fees, because they don't take cases where there is little chance of being paid, or they seek a "carve out" for their bills from the claims of secured creditors.

"It's uncommon for lawyers not to get paid. I suspect they're not optimistic about a carve out," said Skeel.

A lawyer representing salaried retirees said the Jones Day request suggested his clients could get nothing.

"That's why I'm concerned," said Trent Cornell, of Stahl Cowen in Chicago.

He also said it could be aimed at forcing secured lenders in the bankruptcy to accept the proposed sale, rather than reflecting actual state of Chrysler's finances.

"They are negotiating with creditors and lenders to say that if they don't go along this thing, it will crater."

Jones Day and Capstone declined to comment.

(Reporting by Tom Hals, editing by Leslie Gevirtz)