Posted on 06/07/2009 5:06:39 PM PDT by Pride_of_the_Bluegrass
In my development finance work in the developing world, I have undertaken a lot of negotiations with businesses (mostly media companies) in places ranging from South Africa to Guatemala to Serbia looking to borrow money. The nonprofit private equity fund I work with has standard loan documents, of course, and over the years has looked to tailor them to fit risky investment in these environments with less than perfect adherence to the rule of (contract) law.
As I watch the Detroit restructurings unfold, particularly the strong-arming of senior and secured creditors, I wonder what new covenants creditors might want to put into new bond issuances by US businesses that might eventually become entangled with government. I've been reflecting on this looking back over the standard documents that I have used over the past twenty years. Interestingly, the contract forms I've used do not have very many special political risk terms.
LOL. When the entity charged with enforcing the law is taken over by thugs, no contract language can protect you. How will the overpaid law school grads cope with a world where law is what Rahm wants it to be, that day?
First born daughter as collateral?
What enforceable “covenant” can be written, when bankruptcy courts, mentioned in The Constitution itself in the same breath as Congress’s ability to levy taxes, are rendered moot on imperial whim?
Yes, we have basically become a banana republic.
Is the person or entity you are lending to honest? First question, if the answer is no, stop immediately. Nothing on earth can make a loan to a dishonest deadbeat sound. No terms, no collateral, no legal environment, nothing.
When the Black Letter Law becomes mute nothing is safe from this Administration. I can’t see how the GM and Chrysler can withstand a SC challenge. All bonds holders will be watching very closely.
Presidential blood
And all I got was this lousy Che T-shirt! ha.
WHO in their right mind would want to invest in any US assets or companies?? I might as well invest in Russia, ha!
that Nigerian scam is not sounding so silly now, I probably would come out ahead of GM.
A certified copy of President Zero’s real long form birth certificate from Kenya.
Jack
.......I can’t see how the GM and Chrysler can withstand a SC challenge. All bonds holders will be watching very closely.......
I can’t either. I f SCOTUS punts it, it’s all over except for the revolution.
International escrow.
WASHINGTON — Opponents of Chrysler’s sale to Fiat are asking the Supreme Court to block the deal.
Three Indiana state pension and construction funds filed emergency papers at the high court early today to put the sale on hold so they can pursue an appeal.
The federal appeals court in New York approved the sale Friday, but gave objectors until Monday afternoon to try to get the Supreme Court to intervene. Chrysler wants to sell the bulk of its assets to a group led by Italy’s Fiat as part of its plan to emerge from bankruptcy protection.
The emergency request goes first to Justice Ruth Bader Ginsburg, who handles such matters from New York. She can act on her own or refer it to the entire court.
http://www.grandforksherald.com/event/article/id/121765/group//
You have the U.S. government covenant not to interfere with the other terms, then have the President and Attorney General sign off on it.
How would that help if the signatures were Bush’s cabinet?
I don't lend to deadbeats. The auto companies were transparent crooks stealing for the unions, for decades.
Black letter anything has nothing to do with it, nor politics. It is mere banking principle.
"I man I don't trust could not get a dime from me on all the bonds in Christendom" - JP Morgan
The Unions are receiving better treatment than Creditors. Why should bondholders be treated less than retirees and Unions. Better yet, why should I invest in bonds if they are not protected by law.
You shouldn't lend to notorious criminals.
If you find these concepts difficult, maybe you should consider knitting as a hobby, instead of finance.
“What New Bond Covenants Would You Demand”
That my martinis be stirred, not shaken.
I was referring to original bondholders who expected conservative investment returns when issued bonds. I said nothing about the secondary market for bonds. Only a fool will buy into investments expecting 30-40% pawnshop returns. You said you own some of them bonds, and you say I should stick with knitting as a hobby. I never bought the bonds but I do pity the owners.
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