Chrysler holdouts must say who they are, judge says

[steven johnson]

Source: Newsday

NEW YORK, May 5, 2009 (Reuters) — A small group of Chrysler's lenders who have objected to the Obama administration's plan for a quick dash through bankruptcy must identify themselves, in spite of death threats, a U.S. judge ruled on Tuesday.

Judge Arthur Gonzalez, who is overseeing Chrysler's bankruptcy case in Manhattan, said that the lenders must disclose their identities on Wednesday morning, leaving open the possibility that some may change their minds.

"These lenders do not have grounds for (their identity) statement to be sealed," Gonzalez said at the court hearing, saying threats on the Internet did not meet the bar for such a request and that concerns about reputational harm were not subject to protection by the court.

In court papers filed earlier on Tuesday, the group of lenders said they were being blamed unfairly for Chrysler's failure amid a political backlash. Tom Lauria, the lawyer representing the lenders, said that a public disclosure of the identities of the funds would "force several of these lenders to surrender their legal rights and agree to the government's illegal plan."



Read more: http://www.newsdaily.com/stories/tre5403ni-us-chrysler/

---

Poor babies.

[xchrom]

1. good. nt

[Laelth]

2. Good for the Judge! n/t

:dem:

-Laelth

[IndianaGreen]

3. Let's hear their names!

I'll bet they are finance companies that got some of the TARP money.

[blue_onyx]

17. If they did recieve TARP funds...

I want every damn cent returned. Funding companies so they can survive and destroy Chrysler is not acceptable.

[ooglymoogly]

4. KR NT

[IndianaGreen]

5. Creditors May Have Pushed For Chrysler Bankruptcy To Rake In Bailout Cash

A Bolshevik government would have jailed or executed all these blood sucking bankers and financiers.

Creditors May Have Pushed For Chrysler Bankruptcy To Rake In Bailout Cash

The White House, auto executives and union representatives were all able to come to an agreement last week to keep Chrysler out of bankruptcy. But the car company's creditors -- Wall Street banks and hedge funds -- refused repeated compromises and drove the company under.

The refusal doomed a major American auto company to bankruptcy, but it may have been a smart business move for the lenders.

Many of the Wall Street firms holding Chrysler bonds may also own credit default swaps that they bought to hedge their bets. These swaps, which are essentially like an insurance policy on the bonds should Chrysler default, were likely mostly issued by AIG.

AIG, thanks to the government bailout, has paid off swaps in the past at 100 cents on the dollar. Under the deal they would have had to accept with Chrysler, the bondholders would have received as little as 30 cents on the dollar, for example.

Why take 30 or 35 cents on the dollar from Chrysler when you can get the whole buck from the American taxpayer?

http://www.huffingtonpost.com/2009/05/05/creditors-may-have-pushed_n_196964.html

[ProgressiveProfessor]

10. Nonsense...these are the senior secured creditors who the US Gov wants to bypass in favor

of the unsecured ones, a prima facie violation of bankruptcy laws. Many of the refusers are 401K representatives and could be sued if the do not stickup for their clients rights as first in line in the bankruptcy. The Huffpo article is nonsense since it conflates the potential (author used the word "may") AIG issue with the secured creditor issue. While some organizations *may*have both, the issues are not directly linked.

One of the lead lawyers for them has made some very strong claims. He is not some RW nut job, and depending how you read some of his statements, if the Gov does not back of, he will push back with proof of the strong arming. Waiting to see how that one plays out.

Regardless, the US Gov is advocating the bypassing of black letter law to favor one creditor over another.

[No Elephants]

23. What is the true net liquidation value of the assets? Unless you know that, you

don't know whether or not these particular so-called secured creditors are in fact fully secured or only partially seccured. (I should have specified a present value adjustment as well. And, if you don't know that, your statements about black letter law are not necssarily accurate, in the context of this case.

If they are fully secured, your statment about black letter law applies. If they are not fully secured, your statement applies only to the part of their debt that is fully secured. However, on another thread, a poster indicated that the value of the assets is contested and that the TARP lenders, who do want the compromise, have something to do the valuation of the assets. Sounds to me like, at a mininum, protracted litigation over valuation.

Additionally, the debtor may have defenses against some or all of the loan provisions, counter-claims, etc. And, dealings between borrower and lenders tend to get messier and messier the more the debtor goes under.

If things were as clear cut as you claim, no secured lender would ever have reason to compromise in any bankruptcy proceeding, yet many have and many will. Nor would these particular "secured" creditors have had any reason to waste time and legal fees even discussing compromise before this debtor filed, yet they did. Further, they could have put the debtor into bankruptcy--including Chapter 7 liquidation--at any time, yet they didn't.

So, you may or may not be right about black letter law, but we don't have anything like enough information yet for any of us to reach that conclusion.

Your claim that the plan is illegal, however, is very misleading, no matter what. The plan is, in essence, a settlement proposal. Parties are perfectly free to propose any kind of economic settlement they want. The proposal will not go into effect unless and until a court of law approves it. By definition, nothing is illegal.

[Lucky Luciano]

16. Don't be too misled...

If they bought CDS to protect their bonds, there is a good chance that they paid 50 or 60 cents on the dollar up front - at about the same time they bought the bonds in the upper 40s to 50 cents on the dollar...so the CDS may pay 100 cents in exchange for the Chrysler bonds, but that same CDS also cost a lot.

...and ProgressiveProfessor above is also making an excellent point - glad he said it. This is not at all as black and white as you think.

[No Elephants]

24. Don't you be too misled either. Please see Reply #23.

[99th_Monkey]

6. "...in spite of death threats" (??) Oopsie. Looks like these scumbags got LOTS to hide. hmm. ~nt

[IndianaGreen]

9. The creditors are Wall Street banks and hedge funds

insured by AIG. Read my post above.

[mbperrin]

12. My money's riding on vampire bloodsuckers, too.

Do make them come into the light.

The whole AIG rescue was a work of utter mischief and should never have been done. They should have gone the way of Lehman. And I've said so since day one.

[DCKit]

19. If by "vampire bloodsuckers" you mean Cerebus and all the firms that already got bailout cash...

then I think you're right.

[ProgressiveProfessor]

14. The Huffpo piece you quoted is nonsense

with a large number of hypotheticals. Really poorly done.

[Tansy_Gold]

7. the judge will cave. Anyone who expects justice these days

is smokin' good stuff.

There is no justice in this country any more. None.



Tansy Gold

[ProgressiveProfessor]

11. I am hoping he does not and supports the secured creditors against the government

[pleah]

8. Time to come into the light. n/t

[MasonJar]

13. AWWWWWWWWWW! Submit to the government's illegal plan.

AWWWWWWWWWWWW! If they are being legit, why should that be so? This judge sounds like a winner to me.

[ProgressiveProfessor]

15. The plan is illegal in that it puts unsecured creditors ahead of secured ones.

The court said that even with death threats it has no authority to block publication. Unless an immediate appeal is filed, they will come out. I believe the court is wrong but it will not matter in the end one way or the other. Without a transcript it is not possible to know if the court acknowledged the death threats as real.

[24601]

18. My read is that the holdouts are the ones who did not receive

TARP funds. The ones going along are those who can make up the loss by government funds. Sure, I'll forgive your debt as long as someone else pays me! But the ones who are not reimbursed by TARP funds have a legal responsibility to their investors. The government is way out of line on this one.

[No Elephants]

25. Please see Reply # 23.

[steven johnson]

20. NYT: "Chrysler Holdouts Are Named"

Following a judge's order, the group of dissident holders of Chrysler's senior secured debt -- or what's left of them -- revealed their identities in a court filing on Wednesday.

The members include three funds associated with Schultze Asset Management; Stairway Capital Management; Oppenheimer, which holds debt in two funds; Group G Partners, which has holdings in two funds; and Foxhill Capital Partners.
By opposing the Obama administration's out-of-court debt restructuring plan, this group of holdout creditors has found themselves in the national spotlight. Last Thursday, as Chrysler filed for bankruptcy protection in New York, President Obama criticized the holdouts as "speculators," even as the creditors argued that they were being treated unfairly under the government's plan.

The majority of the holders of Chrysler's $6.9 billion in senior secured debt, a group led by JPMorgan Chase, has agreed to accept the government's proposal and take a big loss on their holdings.

What began last Thursday as a collection of about 20 investment firms holding a combined $1 billion in debt has dwindled to a set of five, holding a total of about $295 million. (The group apparently lost a member, since in a filing on Tuesday, it reported holding about $300 million.)

The members include three funds associated with Schultze Asset Management; Stairway Capital Management; Oppenheimer, which holds debt in two funds; Group G Partners, which has holdings in two funds; and Foxhill Capital Partners.
By opposing the Obama administration's out-of-court debt restructuring plan, this group of holdout creditors has found themselves in the national spotlight. Last Thursday, as Chrysler filed for bankruptcy protection in New York, President Obama criticized the holdouts as "speculators," even as the creditors argued that they were being treated unfairly under the government's plan.


http://mobile.nytimes.com/article;jsessionid=033F59224471ED9B052E1B53EC9F9113.w6?a=361309&f=19

[No Elephants]

26. Anyone murder JPMorganChase, Foxhill Capital, Group G or Shultze Asset Management?

[Vidar]

21. Good for the judge.

[Hotler]

22. If they have nothing to hide they'll

step into the sun shine.