Posted on 05/01/2009 3:07:41 AM PDT by lowbuck
Go to the link to read this interesting article. Here is something not being reported in the MSM:
In a statement published on The Wall Street Journal Web site, the recalcitrant bondholders said they sought an accommodation with the government.
"Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler's rehabilitation, we offered to take a 40 percent haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50 percent or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with 100 percent recoveries, while even GM's unsecured bondholders are receiving a far better recovery than we are as Chrysler's first lien secured lenders," the group said.
(Excerpt) Read more at spiegel.de ...
Chrysler has no one to blame but itself for this situation. When the going got tough, instead of doing the right thing and declaring bankruptcy on their own, Chrysler insisted on taking billions of dollars of our money first.
Chrysler chose to get into bed with the devil. Everything bad that happens to them now is the result of that fateful decision.
The Kenyan Clown’s circus is going to make the U.S. a very unpopular place for business, and these kind of shenanigans are going to hurt our capital markets. When simple order of precedence become meaningless, investors are going to shy away.
How could they possibly think anyone would really buy one of their products? Please post here if you have recently purchased a Chrysler. I would love to know the reasoning.
I am talking about the letter from Chrysler's creditors, not about Chrysler's product line. It was released yesterday:
April 30, 2009 — As of last night’s deadline, we were part of a group of approximately 20 relatively small organizations; we represent many of the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler. Combined, these loans total about $1 billion. None of us have taken a dime in TARP money.
As much as anyone, we want to see Chrysler emerge from its current situation as a viable American company, and we are committed to doing what we can to help. Indeed, we have made significant concessions toward this end — although we have been systematically precluded from engaging in direct discussions or negotiations with the government; instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.
What created this much-publicized impasse? Under long recognized legal and business principles, junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full. Nevertheless, to facilitate Chrysler’s rehabilitation, we offered to take a 40% haircut even though some groups lower down in the legal priority chain in Chrysler debt were being given recoveries of up to 50% or more and being allowed to take out billions of dollars. In contrast, over at General Motors, senior secured lenders are being left unimpaired with 100% recoveries, while even GM’s unsecured bondholders are receiving a far better recovery than we are as Chrysler’s first lien secured lenders.
Our offer has been flatly rejected or ignored. The fact is, in this process and in its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.
We have a fiduciary responsibility to all those teachers, pensioners, retirees and others who have entrusted their money to us. We are legally bound to protect their interests. Much as we empathize with Chrysler’s other stakeholders, the capital is just not ours to contribute to their cause by accepting a deal that is outside the well established legal framework and cannot be rationalized as being commercially reasonable.
We are continuing to discuss our position with the United States Treasury. We have made a proposal which we earnestly believe is fair and would appropriately recognize our legal position.
As President Obama implied yesterday, it is likely that Chrysler will have to file Chapter 11 whether or not all lenders agree to any particular proposal. Chapter 11 is often used to help implement an agreed deal and dispose of unwanted legacy liabilities. We are hopeful and optimistic that we will reach a positive resolution of our issues so that all stakeholders will move forward together to implement Chrysler’s “quick trip” restructuring in an un-contested proceeding. Our Group will never initiate a bankruptcy filing on Chrysler — that is a decision for the Company and the Administration to make.
As we all appreciate, laws are the foundation of our economy and society. Despite recent travails, our country remains the economic envy of the world and the United States remains a vital engine of global growth. The rule of law made it that way. We urge that people remember this and not succumb to unproductive and unwarranted finger pointing.
Sincerely,
The Committee of Chrysler Non-Tarp Lenders
(Courtesy of the Wall Street Journal, at http://blogs.wsj.com/deals/2009/04/30/statement-from-non-tarp-lenders-of-chrysler/. My emphasis added.)
If we won't play by our own rules, then other people aren't going to be interested in investing in our markets.
What repercussions will the Oppenheimer Fund Family (i.e. Mass Mutual) see for telling El-Duce' to stuff it.
Note, The Bond Holders really did take it in the shorts.
Fiat already has had their arm twisted or deal sweetened as they go from 20% ownership to 35% ownership if they build 40mpg squirrels.
A little blurb over at the Detroit News...
The Pension stays intact as does the UAW work agreement...
You heard it here 1st, when do we have Tea Parties in front of GM and Fiat Headquarters in 2 or 3 years as Obummer keeps funneling them money to keep them and Michigan afloat?
Call me cynical, but I do not think any of this will work...
Your right....not much exposure of this angle of the story..
Obama simply loathes our economic system. His mentors are all Marxists.
I own a Chrysler 2003 Sebring V6. I really wanted a Pontial Grand Prix but thought the Sebring because 1) It test drove great, 2) had a nicer interior, and 3) was about $5K less than the GP. I was a little apprehensive given Chrysler’s reputation, but it has turned out to be the best car I ever owned (for 7 years now).
More recently, I bought a Dodge Charger. I don’t drive it as much as I’d like so its hard to compare the two. Pros: I liked the retro look of the Charger and it drives/handles great. Its a V6, but still has plenty of power. So far, pretty reliable, though I have less than 20K miles on it. Cons: Minor stuff. The interior is a little on the cheap side—they clearly want you to buy the premium version. The emergency brake cable snapped the 2nd time I used it. Dealer fixed it, but I am relucant to use it again.
zerO was furious when I saw him on TV after this was announced. I don’t think anyone has seen him publicly angry to this degree before.
He does not have the power of other historical Marxist dictators and it obviously rankles him.
I listened to a talking head yesterday that indicated that those who put the best interests of their investments ahead of the country (implied as stated by Obama) could be characterized as un-American.
Yes, good cars. But the question was “would you buy one from them now?”.
Yes, good cars. But the question was “would you buy one from them now?”.
And, no, I don’t work for them.
Yes it did, but the bondholders didn't choose anything but to make a loan to Chrysler, in comparison to stockholders, who chose the management.
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