Posted on 05/08/2009 9:36:42 AM PDT by reaganaut1
A group of Chrysler creditors opposing the carmaker’s reorganization is likely to disband after two more investment firms withdrew from its membership, a person briefed on the matter told DealBook on Friday.
The withdrawals of OppenheimerFunds and Stairway Capital Management will likely drop the group, calling itself the Committee of Non-TARP Lenders, below 5 percent of Chrysler’s $6.9 billion in secured debt, this person said. That would almost certainly eliminate the group’s standing in federal bankruptcy court.
Ever since the group made public last week, its membership has shrunken by the day as it faced public criticism from President Obama and others. That continued withdrawal of firms led Oppenheimer and Stairway to conclude that they could not succeed in opposing the Chrysler reorganization plan in court, the two firms said in separate statements.
In its first public statement last week, the ad hoc committee said that it consisted of about 20 firms holding $1 billion in secured debt. But hours after Mr. Obama criticized the firms as “speculators,” the group lost its first major member, Perella Weinberg Partners, which changed its mind and signed onto the Chrysler plan.
By Tuesday, the group’s holdings had fallen to about $300 million. And by Wednesday, when the committee made a court-mandated disclosure of its roster, that figure had fallen to $295 million. Judge Arthur Gonzalez, who is overseeing Chrysler’s bankruptcy case, overruled the group’s objections to preliminary approval of the carmaker’s debtor-in-possession financing and sales procedures that would pave the way for the company’s reorganization.
Oppenheimer said Friday that “senior creditors can no longer reasonably expect to increase the recovery rate on the debt they hold by opposing the Taskforce’s restructuring plan.”
(Excerpt) Read more at dealbook.blogs.nytimes.com ...
UAW 1?
Federal Government 10, then.
I hope all the Fortune 500 companies are watching this.
Their ability to raise capital on the strength of their secured assets has now been decimated. Who is going to buy "secured" bonds now?
Government bailouts will now be the only method upon which they will be able to keep their heads above water in down times.
I wish Lauria would file a request for an emergency stay/injunction with the SCOTUS on this Chrysler asset sale.
First they came for the bondholders and no one objected.
They were just a bunch of Jewish bankers..so what?
He can only do what his clients permit him to do. Clearly, they are scared.
The only consolation here is that if the worm ever turns, Obama is going to find himself with a lot of angry people piling on. I just don't see it happening any time soon, what with the Dem co-ordination of vote manipulation with ACORN and with immigration, and the Bush-shocked state of the sheeple.
Well, I guess they are being eliminated one by one.
The Socialists will crush all opposition.
Another government ripoff bookmark bump!
We will need a constitutional ammendment in the future to ban the government from interfering with private industry and lending.
It will be the only way to prevent this government migration to socialism/fascism (depending on how you use the term).
Yes, the Kenyan Clown's shenanigans could well damage our capital markets, making capital more expensive and less available.
You are thinking within the box. When the rules change, make new rules.
Thinking must be outside the box.
Section 363 of the U.S. bankruptcy code allows for Chapter 11 debtors to sell assets before creditors can challenge the general reorganization plan.
In essence, section 363 gives the bankrupt entity, in this case, Chrysler, the right to sell assets to another organization, in this case Fiat, BEFORE creditors can challenge the Chapter 11 reorganization plan. This significantly reduces the collateral against which secured creditors can make claims in bankruptcy.
The summary of the grounds for Laruia’s objection:
1. The Proposed Sale Constitutes an Illegal Sub Rosa Plan that Redistributes Value Among Creditor Classes.
2. The Proposed Sale Fails the Requirement of Section 363(f).
3. The Sale Is Not Proposed In Good Faith.
4. The Taking of Collateral through a Direct or Indirect Use of TARP Authority is Unconstitutional. (This one is Huge as it sets a case law precedent.)
http://zerohedge.blogspot.com/2009/05/chrysler-non-tarp-lenders-come-out-guns.html
Obama basically gave the company to the UAW — I will never buy a Chysler/Dodge/FIAT again in my life.
Honestly, many have said it and I don’t know why we aren’t pursuing this. Under what authority is this being done? As best I can tell its TARP. TARP oversite is not being done as required and TARP is clearly unconstitutional. It should be challenged and struck down. That’s the SCOTUS action that is needed.
I don’t get it. Is there some magic that ensures success after a “Chapter 11” bankruptcy? It seems there is alway talk about the rosy times that will ensue. With UAW owning more than half, why would I think Chrysler is going to be any different (or more succesful) after a reoganization?
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