Lender going to Supreme Court to stop Chrysler's sale to Fiat

Discussion in 'Chrysler' started by Chuck, Jun 8, 2009.

  1. Chuck

    Chuck just the messenger

    Lenders going to Supreme Court to stop Chrysler's sale to Fiat

    [​IMG] Critical: if sale is blocked, Fiat could back out on June 15, Fiat calls the deal off....something similar could also endanger the GM quick bankruptcy

    [fflash=LEFT]http://www.youtube.com/v/y3Yq2ZjNC4w&hl=en&fs=1&[/fflash]Tomoeh Murakami Tse - WASHINGTONPOST - June 7, 2009

    The lenders are looking out for themselves and in the process Chrysler could go into Chaper 7 and hurt the economy more --Ed.

    A small but persistent group of lenders has turned to the U.S. Supreme Court in its last attempt to challenge the government-backed sale of Chrysler's assets to a company run by Italian automaker Fiat.

    Three Indiana state pension and construction funds late Saturday filed documents requesting that the sale be delayed so that the Supreme Court can hear their appeal. Two lower courts have already rejected the lenders' objections. On Friday, the U.S. Court of Appeals for the 2nd Circuit ruled the sale could go forward after 4 p.m. today or earlier if the Supreme Court declines to take up the case.

    The Indiana funds' emergency application was made, under Supreme Court procedures, to Justice Ruth Bader Ginsburg, who oversees the 2nd circuit appeals court. Ginsburg could rule on her own or refer the matter to the high court. ... [rm]http://www.washingtonpost.com/wp-dyn/content/article/2009/06/07/AR2009060702548.html[/rm]
    Last edited: Jun 8, 2009
  2. jkp1187

    jkp1187 Well-Known Member

    Re: Lenders going to Supreme Court to stop Chrysler's sale to Fiat

    Well...creditors have rights, too, and deserve their day in court, even if the White House would prefer otherwise. And it's still an open question for me whether or not a chapter 7 for both GM and Chrysler would hurt the economy (and American productivity/competitiveness) "more" versus this government stage-managed process whereby billions are thrown at these uncompetitive dinosaur companies at a time when the annual federal government budget deficit is projected to be in excess of $1,800,000,000,000.00.
  3. bnther

    bnther Well-Known Member

    As much as I hate to, I'm going to sympathize with the lenders on this one. I don't know of their total financial state, but 29 cents on the dollar for a 6.9 billion dollar loan might very well send them to bankruptcy as well. Either way, it will end up costing jobs.
  4. Indigo

    Indigo Witch with wry sense of humor

    They're probably trying to get enough of their loans repaid so they don't fold too. What is the deal with this new American philosophy that states that it's okay to borrow money and never pay it back?
  5. chibougamoo

    chibougamoo Well-Known Member

    ... and who in their right mind is going to extend any kind of credit or terms to the newly minted, extra-super-shaky, cash-disolving, Neuveau-GM and Neuveau-Chry-Fiat when they come out of Chapt 11? Why on earth would anyone ship parts to the same bunch that just stiffed you for the last 6 months of production that you have "given away" thanks to Bankruptcy #1? (When your profit margin was already squeazed to the pulp).

    (And if things don't turn around, who says there won't be Bankruptcy 2?)

    Lose my shirt the first time, shame on me; offer me the chance to lose my shirt the second time? Nah, I think I'll make something other than autoparts, or just put the money in oil futures.
  6. scywin

    scywin Member

    As a GM bond holder, I did not expect the government to step into the bankruptcy and treat the UAW better than I am being treated. I believe that treatment is illegal. If this proceeds in the manner proposed, I will avoid any UAW built cars, even those of Toyota from here on.

    There are millions of individual GM bond holders like myself. Some are retirees being forced to go back to work. Others are facing other types of hardships. There is no reason to favor the UAW over other GM or Chrysler stakeholders.
  7. Chuck

    Chuck just the messenger

    I'm not a supporter of the UAW.

    I don't like the hardships throughout GM and Chrysler.

    Both companies had a cancer that lasted for decades and may be terminal.
  8. naeallen

    naeallen Nate

    "The lenders are looking out for themselves and in the process Chrysler could go into Chapter 7 and hurt the economy more"

    Why wouldn't they be looking out for themselves? Investing isn't a philanthropic enterprise.
  9. kendan

    kendan Mid TN Hypermiler!

    These funds purchased these debts at a discounted price hoping for a return when Chrysler was already on the ropes. Sounds like the vultures got took! Seriously, they speculated and are now bitching because they played the odds and lost!
  10. scywin

    scywin Member

    Are we a country that is under the rule of law, or does a politically favored group trump all other creditors in a bankruptcy? These particular creditors should be paid ahead of the UAW, not after the UAW, under existing bankruptcy law.

    These "vultures" as you call them are a bunch of retirees. How would you feel if the government just decided to raid your pension plan?
  11. chilimac02

    chilimac02 Bible Professor & Minister

    Personally I hope the court upholds the law. That would mean that the bondholders would get to be first in line. So they would recover what they are owed before anyone else. Do I think this will happen? Nope. The Government will ignore the law and do what they wish.
  12. scywin

    scywin Member

    I believe you are right. The excuse for government involvement was to prevent a bankruptcy. Instead they decided to take care of their UAW cronies and force a reordering of stakeholders that could not have occurred in a normal bankruptcy without the government being involved. I'm not normally a conspiracy theorist, but clearly the government has been disingenuous about the real motive for government involvement.

    Henceforth I will avoid any investment where there is a union presence, especially the UAW. That includes cars that have any UAW content, regardless of mileage.
  13. greenrider

    greenrider Well-Known Member

    What about tax increases to cover pension shortfalls?
  14. greenrider

    greenrider Well-Known Member

    As for chapter 7, I would ask how our country has adapted to changes in the job market over the past couple centuries. We moved from an agrarian society to a manufacturing society, an then to a more service-based society. Jobs were lost and others gained. I don't recall the whalers getting a bailout when whale hunting went by the wayside. Neither did a friend from schol who's father repaired typrwriters. The point is that progress naturally will open new doors and opportunities even as others close. If Chrysler ends of riding off into the history books, let them take their lack fo foresight and sub-par products with them. It will hurt in the short term but be much better in the long term as the void is filled with superior companies with better products such as Honda, Ford and Toyota.
    The creditors are right to ask for a fair shake, and Chrysler obviously cares little about anyone given the way they've treated their dealers. After the deal their disenfranchised dealers got, why would I ever trust them to stand by their product and help me asa consumer if I needed it (and with Chryslers, there's a good bet you would need it).
  15. kendan

    kendan Mid TN Hypermiler!

    I would be pissed if my pension fund speculated like this. (And it's not the retiree's who did this, it's the meatheads who run the funds who did it!) When these funds bought those bonds, Chrysler was already circling the drain. Yeah, I would be royally pissed but I would even more so because of a poor investment choice! Of course, bankrupcy for any of our auto makers seemed unthinkable just last year.
  16. jkp1187

    jkp1187 Well-Known Member

    That may be true, but the fact remains that these bondholders are people and they have rights that cannot be dismissed by the head of state in the name of political expediency.
  17. Earthling

    Earthling Trying to be kind to Mother Earth

    These bondholders are insignificant in the big scheme of things. Many, many more people will be hurt worse than the bondholders if Chrysler is liquidated because of this lawsuit.

    By the way, my Ford stock is doing very well, thank you. I only wish I had bought more of it.

  18. ILAveo

    ILAveo Well-Known Member

    "But a trio of Indiana state pension and constructions funds, which own $42.5 million of Chrysler's $6.9 billion in secured debt, aggressively objected to the sale, saying that it does not provide a big enough return for secured debt holders, while paying off unsecured stakeholders.

    The Indiana funds bought their debt in July 2008 for 43 cents on the dollar."

    If they are still getting $.29 on the dollar their roughly 30 per cent loss is similar to the stock market's performance over the same period. Just being a nation of laws doesn't mean we should have to listen to a bunch of violin music because a few vultures took about the same hit as everybody else.
  19. scywin

    scywin Member

    What makes you think this was a speculation? In my case I have owned my GM bonds for 8 years. When they wee purchased the companies were profitable and these were sold as "widows and orphans" type investments.

    In the case of Chrysler, most of the bondholders were part of the buyour from Daimler. They are secured bondholders, which means that in the event of a bankruptcy they are first in line to get paid. Shareholders might be lower in the pecking order, but it is just plain wrong to throw around terms like "speculation" when that clearly is not the case.
  20. scywin

    scywin Member

    So after having my IRA raided to cover UAW pensions, I get to pay higher taxes to cover the Indiana pensions? How about we just follow normal bankruptcy law?

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