The non TARP lenders rebel on Chrysler deal
Obama is using the bully pulpit to bully those he lacks empathy for.A New York bankruptcy court will hear arguments on Tuesday by a group of Chrysler lenders seeking to block the restructuring of the ailing Detroit carmaker on the grounds that the process is “patently illegal”.
The dissident group, calling themselves the “non-Tarp lenders”, drew President Barack Obama’s ire last week after refusing to sign on to a deal under which Chrysler offered to swap $6.9bn of secured debt for $2.25bn in cash.
The four banks that hold the bulk of the debt – JPMorgan, Citigroup, Morgan Stanley and Goldman Sachs – accepted the offer under strong political pressure. All four have received emergency government aid through the troubled asset relief programme.
The dissident group includes about 20 money managers, among them Oppenheimer Funds and Stairway Capital Management. Mr Obama accused the group of forcing Chrysler into Chapter 11 bankruptcy protection last Thursday.
Chrysler asked a New York bankruptcy court on Monday to start the process of splitting it into “old” and “new” companies. In theory, a bidding process would take place for the new company on May 21 under section 363 of the US bankruptcy code.
But with no other prospective buyers in sight, the carmaker would almost certainly be sold to the healthcare fund of the United Auto Workers union, Italy’s Fiat, and the US and Canadian governments.
Assets in the old Chrysler would either be sold or closed down.
...Furthermore, Chrysler can support its supplier base and dealer network for only a short period. “When that period expires, so does Chrysler,” the filing warns.
The dissident non-Tarp lenders allege that Chrysler’s proposal strips them of their rights as senior lenders and ignores procedures set out in the bankruptcy code.
“It is a sale that was orchestrated entirely by the Treasury and foisted upon [Chrysler] without regard to corporate formalities, the fiduciary duties of [Chrysler’s] officers and directors, or the other important checks and balances typically found in good faith sales,” they said.
“The government exerted extreme pressure to coerce all of [Chrysler’s] constituencies into accepting a deal which is being done largely for the benefit of unsecured creditors at the expense of senior creditors.”
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Tom Lauria, lawyer for the non-Tarp lenders, told the court that some of his clients had received death threats. The group may seek to keep the identities of the members secret for safety concerns and to avoid public pressure over not participating in the debt deal.
It will take great courage for the bankruptcy court to resist the strong arm tactics of the Obama administration, but the case law appears to be on the side of the non TARP lenders. It is passing strange that Obama would put the interests of the UAW pension funds ahead of the other pension funds represented by the non TARP lenders. At least the latter had nothing to do with destroying the companies to begin with.
Obama thinks he's Tony Soprano now-
ReplyDeleteThe White House says there’s “no evidence”- note that Hitler was careful to only give verbal orders, too... and Obama's not new to this sort of thing.
It’s plenty clear what really happened- Obama knows he owns the press corps… and he now even treats them with arrogant contempt, like children- hectoring reporters to “not waste their question”, telling them when they’ve “got enough pictures”, and even to “get back on the bus” in - ouch.
He wouldn’t call on Fox News after the TEA parties, and skipped the NYT at his presser a couple days after a reporter asked Obama if he was a “socialist”. Since when is a refusal to answer legitimate questions and explain your actions to the American people acceptable in a US president?
Like most narcissists, Obama has no use for The Contstitution, law, religion, ethics, or anything else that gets in his way-
The idea that he’d sic his MSM sycophants on some bank that isn’t willing to do as he says doesn’t surprise me one iota.
Obama's completely out-of-control. But what did anyone expect with a neutered press, compliant congress, and cabinet full of sycophants?
As far as "farcical negotiations" go... just ask Eric Cantor, he can tell you how it works with this White House.
http://reaganiterepublicanresistance.blogspot.com