Contract law was trampled as claims that were supposed to be equal received unequal treatment. GM and Team Obama chose a debtor-friendly venue of NY by starting an action against itself when GM-owned Saturn of Harlem initiated a claim against GM in that court.
Debtor-friendly Judge Gerber ruled against bondholder group that sought due process and a negotiated settlement. Treasury Department, through Auto Task Force member Harry Wilson threatened full liquidation of GM if the court did not agree to Task Force/Obama’s plan. The plan was enacted as sought and bondholders received a fraction of what the UAW got. Approximately 10 to 15 cents on the dollar compared to a typical negotiated bankruptcy which would have seen them get 40 to 50 cents on the dollar.
Thanks much, Mark. Bkmk for later use.