Free Republic

Every country should pay its sovereign debt. Default, we are told, is not an option. But has anyone told China? The United States pays interest on approximately $850 billion in debt held by the People’s Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders. Successive U.S. administrations have chosen to sidestep this fact, allowing business and trade with China to proceed as normal. Now that the relationship with China has soured and the People’s Republic of China has become the greatest adversarial threat to the U.S. and Western security, policymakers should revisit...

Credit Suisse said 16 billion Swiss francs ($17.24 billion) of its Additional Tier 1 debt will be written down to zero on the orders of the Swiss regulator as part of its rescue merger with UBS (UBSG.S), angering bondholders on Sunday. FINMA, the Swiss regulator, said the decision would bolster the bank's capital. The move reflects authorities' desire to see private investors share the pain from Credit Suisse's troubles.

Dive Brief: Skanska USA Civil Southeast has turned to the federal courts in an attempt to eliminate or significantly reduce its liability for damages caused by barges that broke loose from the $430 million Pensacola Bay Bridge construction project during Hurricane Sally in August by having its barges recognized as vessels protected under maritime law. In five separate filings each covering a different barge, Skanska asked the U.S. District Court in Pensacola, Florida, to declare that it is not liable "for any loss, injuries or damages" related to barge damage, including economic losses suffered by businesses from the closure of...

TALLAHASSSEE, Fla. (News Service of Florida) - Bondholders have gone to a state appeals court as they seek to force the Florida Department of Transportation to pay damages because of lost toll revenues on a long-controversial Panhandle bridge. UMB Bank, which represents bondholders, filed a notice last week that it was taking the dispute to the 1st District Court of Appeal after a Leon County circuit judge ruled in November that the department could not be forced to pay damages. As is common, the notice of appeal does not provide detailed legal arguments. But the appeal is the latest move...

As yet another key debt payment date closes in on Puerto Rico, here's a primer on what you should know, and who it will affect the most ahead of the deadline. Q: If the Puerto Rico Public Finance Corporation (PFC) doesn't pay bondholders on Aug. 1, will it be considered a default? A: Yes. According to Moody's vice president and senior credit officer, Ted Hampton, if there is no payment made on Friday, it will be the first default of a U.S. state, or state-like entity, since Arkansas couldn't make its bond payments during the Great Depression in 1933. Q:...

Hearings on GM's motion to approve its restructuring plan are set to start today in Manhattan bankruptcy court. The heart of the individual bondholders' objections to the Obama Administration's plan to save GM is that it is a sub rosa and unconstitutional effort to do an end-run around the bankruptcy code and to enrich the coffers of the UAW, a key political ally of President Obama. In vacating its brief stay in the Chrysler case, the Supreme Court refused to address the merits of similar allegations, but limited its order to the facts at hand and arguably left open the...

Several weeks ago President Obama pilloried holders of Chrysler debt who refused to take a deal for less than they had expected as secured creditors of the company, famously dismissing them as "a small group of speculators." Bloomberg reported that he also questioned their motives, saying that, "A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout." Among other things, Obama tried to cast the conflict as a moral issue, in effect suggesting that bondholders were greedy and threatening the jobs of hardworking Americans with unfair demands and a lack...

General Motors Corp. bondholders soundly rejected a debt-swap offer critical to the auto maker's survival, pushing the company closer to a bankruptcy filing that could come in the next few days. GM's board of directors will meet later this week to decide the ailing company's next move after bondholders dashed its best hope of pulling off an out-of-court restructuring, the company said Wednesday.

General Motors Corp. said a committee of bondholders has agreed to a sweetened deal to erase some of the automaker's debt in exchange for company stock. The company said in a statement Thursday that it offered bondholders 10 percent of the company's stock with warrants to buy up to 15 percent if they agree to support selling the company's assets to a new company under bankruptcy court protection. The company made the disclosure in a filing with the U.S. Securities and Exchange Commission. The filing says if the bondholders didn't agree to support the sale, then the amount of stock...

General Motors said in a regulatory filing on Thursday that it has proposed a new deal to a committee representing many of its largest bondholders, offering an equity stake of as much as 25 percent in the restructured automaker if bondholders don’t oppose G.M.’s reorganization plan. The filing also fills out many of the details of that plan, crafted under the eye of the Treasury Department, which would be G.M.’s majority owner once it emerged from bankruptcy protection with a 72.5 percent stake. G.M. also confirmed that the government would provide more than $50 billion in bankruptcy financing to see...

The Law: Sure as the sun rises, the U.S. government's manhandling of GM and Chrysler bondholders will ripple outward, striking not only companies and their creditors but the very basis for U.S. power and prosperity.Historians pinpoint the beginnings of U.S. power at 1811, with the liquidation of the First Bank of the United States, founded by Alexander Hamilton. Amid the winds of the War of 1812, First Bank ignored political pressure and insisted that even British bondholders, from the nation the U.S. was preparing to fight, be paid in full. The debt was paid because that was the law. This...

General Motors bondholders felt they deserved something like a 58 percent stake in the company in exchange for their billions of dollars in debt. What they were offered wasn't even close.

Remember the Chrysler "hedge fund investors" that President Obama berated on national TV? Among these people labeled as "no goodniks" by the President were organizations such as the the Indiana State Teachers’ Retirement Fund, and the Police retirement fund. The President of the United States was trying to intimidate retired teaches from exercising their rights as primary investors. That's the politics of change, screw a bunch of retired teachers to reward the UAW for helping you get elected. Now that GM is nearing its bankruptcy a new group of investors are about to get the Presidential screw. Unlike the Chrysler...

Bill Zastrow fears he’s about to lose $240,000 he put into General Motors bonds to finance his kids’ educations, and he puts lots of blame on one man: Barack Obama. “GM bondholders are not speculators as President Obama calls us,” said Zastrow, the 58-year-old president of Millbury’s FileMark Corp. “We’re talking about people’s retirement funds and education funds. These aren’t derivatives or anything like that.” As GM approaches a government-mandated June 1 deadline to either reorganize or file for bankruptcy, Zastrow and other small investors have formed “GM Main Street Bondholders” to call attention to their plight.

Earlier today at my blog, I noted in a post updating the sad situations at bankrupt Chrysler and headling-for-bankruptcy General Motors, that GM is, according to a Wednesday Reuters report, offering secured bondholders a much better deal than the 29 cents on the dollar Chrysler's secured creditors have been offered. Chrysler's "non-TARP secured lenders," after what they allege with much evidential support was a campaign of threats and intimidation by President Obama and the White House, abandoned their efforts to have their first-lien rights recognized in bankruptcy court. But Indiana pension funds holding some of that secured debt representing teachers,...

GM, Harrah's and other deeply-indebted companies want bondholders to take the pain. It isn’t enough that bondholders saw the value of their investments plummet over the past year. A chorus of executives, private equity investors and even President Obama are asking them to sacrifice so that companies such as General Motors, Harrah’s Entertainment and Unisys can survive. While public attention focused on the effort by General Motors ( GM - news - people ) and the Obama Administration's attempts to get bondholders to swap debt for a 10% stake in GM over recent weeks, manufacturer Rexnord and Hexion Specialty Chemicals...

Chrysler is going into Chapter 11 bankruptcy, despite the Obama administration’s efforts to keep it out. The problem was that a group of small bondholders rejected the deal that car czar Steven Rattner and his deputy (and it seems the real dealmaker) Ron Bloom. The bondholders made a good point. They are secured creditors, and in our bankruptcy law secured creditors get paid off in full before unsecured creditors get anything. That’s a sound legal principle: why would secured creditors lend anyone anything unless they can get their security back if the loan isn’t paid off? In this case, the...

DALLAS (CBS.MW) -- Mirant Corp.'s shares rose nearly 20 percent Monday after the power producer said a majority of bondholders support an amended exchange offer, easing fears that the company would have to resort to bankruptcy. The shares jumped 40 cents, or 16 percent, to close at $2.90 on heavy volume of 20 million. Reaching a session high of $3, they reclaimed their highest level since June 2. That's the day that Atlanta-based Mirant (MIR), in an effort to avoid bankruptcy, said it would offer to exchange unsecured debt with secured bonds. Subsequently, holders of subsidiary Mirant Americas Generation's debt...