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Thread: USSC declinesChrysler Bondholder Case

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    USSC declinesChrysler Bondholder Case

    First the background:

    High court keeps Chrysler deal on hold
    Reporting from Washington -- The U.S. Supreme Court said today that it needed more time to consider complaints about the government-engineered sale of Chrysler to Fiat, raising the potential that they could halt the deal and force it to be renegotiated.

    The justices were acting on a request to stay the sale filed by bondholders who said the move was illegal and unfair to them.


    Lawyers for the Obama administration warned the court today against standing in the way. They said Chrysler is losing $100 million a day. Without a deal with Fiat, the nation's No. 3 automaker would face liquidation and a loss of 38,000 jobs and 3,000 dealerships, the government's lawyers said.

    Until Monday afternoon, the court had been expected to turn away the last-minute challenge to the bankruptcy deal. Three Indiana pension funds had objected, but they lost before a bankruptcy judge in New York and the U.S. court of appeals.

    But at 4 p.m., Justice Ruth Bader Ginsburg issued a one-line order that keeps the deal on hold. She did not say when the court would act on the pending appeals. It would take the votes of five of the nine justices to issue an emergency order to stop the deal. Normally, it takes only four justices to agree to hear a case, but an order stopping a case in progress requires a majority vote.


    David Skeel, a professor of corporate law at the University of Pennsylvania, said he was "stunned" the Supreme Court acted to delay the sale, though he believes there are legitimate problems with the Chrysler bankruptcy.

    "I'm very encouraged that they did decide to at least take a closer look because the one thing that nobody has really done yet is that. Everything has been so rushed from the minute the sale was proposed," he said.

    Skeel said Chrysler's bondholders had a legitimate complaint that their claims were treated worse than those of other creditors, particularly the United Auto Workers union.

    "Although the senior lenders are getting less than a third of what they're owed, the employees and the retirees are getting a big chunk of what they're owed," he said. "It sure looks like the sale promises [the union] a fair amount more than they would get in a normal bankruptcy."

    The challenges to the deal involve only a comparatively small amount of money, but they raise a large legal and ideological issues. Together, Indiana pension funds say they have $42 million invested in Chrysler, less than 1% of its secured debt.

    The bankruptcy judge said, in effect, that these small players should not stand in the way of a deal that could save Chrysler and keep the company in business making cars and trucks.
    So the issue is that legitimate creditors were going to get the ole' colonoscopy by the Obama administration paying off it's union pals.

    High court won't block Chrysler saleThe Supreme Court has cleared the way for Chrysler's sale to Fiat, turning down a last-ditch bid by opponents of the deal.

    The court said late Tuesday it had rejected a plea to block the sale of most of Chrysler's assets to the Italian automaker. Chrysler, Fiat and the Obama administration had warned that the high court's intervention could have scuttled the sale.
    The trains will run on time, won't they?

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    Re: USSC declinesChrysler Bondholder Case

    Message to Bond Holders in the USA.

    By US law Bond Holders are supposed to paid off first whenever something like this occurs.. You can forget about that from now on.

    You are also supposed to receive fair settlement..if you don't like 29 cents on the dollar then your bad.


    Message to all Americans..be careful what you invest in because if the Obama's governments feels like it they can and will rob you to pay off their pals.




    Only good news is this will be just one more nail in comrade Obama's casket.

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    Re: USSC declinesChrysler Bondholder Case

    For those who are interested, the Supreme Court's order can be found at:

    http://www.scotusblog.com/wp/wp-cont...der-6-9-09.pdf

    For what it is worth, the Supreme Court did not dismiss the possible merits of the case. It only noted that "'the party requesting a stay bears the burden of showing that the circumstances justify an exercise of that discretion...' The applicants have not carried that burden."

    Also, I am not sure that the plaintiffs would have had standing to raise the TARP issue, namely that Congress did not authorize the Treasury to use some of the TARP funds to finance the auto companies. I believe a Congressman or Senator would have had standing to address what might or might not have been Congress' intent when the legislation was drafted and adopted.

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    Re: USSC declinesChrysler Bondholder Case

    Bravo, Ruth Bader Ginsburg. There are indeed serious legal problems with this Chrysler buyout, and hopefully the Supreme Court will reverse it. If that means Chrysler has to liquidate, so be it.
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    Re: USSC declinesChrysler Bondholder Case

    Quote Originally Posted by Kandahar View Post
    Bravo, Ruth Bader Ginsburg. There are indeed serious legal problems with this Chrysler buyout, and hopefully the Supreme Court will reverse it. If that means Chrysler has to liquidate, so be it.
    Uh...dude?

    The second article linked in the OP says the court declined the case.

    My apologies if that wasn't clear.

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    Re: USSC declinesChrysler Bondholder Case

    Quote Originally Posted by Scarecrow Akhbar View Post
    Uh...dude?

    The second article linked in the OP says the court declined the case.

    My apologies if that wasn't clear.
    Oh, never mind then. I didn't see the second article.
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    Re: USSC declinesChrysler Bondholder Case

    I found this interesting: source= Supreme Court clears way for Chrysler sale to Fiat - Jun. 9, 2009

    In fact, according to bankruptcy judge Arthur J. Gonzalez, who oversaw the Chrysler bankruptcy and held a three-day hearing on the sale in late May, the value of Chrysler's assets in liquidation would have only come to about $800 million, rather than the $2 billion in going-concern value that they're fetching in the sale. Accordingly, secured creditors, including the Indiana pension plans, are doing better in the sale than they could have done otherwise.

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    Re: USSC declinesChrysler Bondholder Case

    Accordingly, secured creditors, including the Indiana pension plans, are doing better in the sale than they could have done otherwise.
    That may very well be true, but there is a right way to do things and a wrong way to do things. You don't give unsecured creditors priority over secured creditors, regardless of how good the deal is. This threatens bankruptcy law in general, and makes it more difficult for other businesses and individuals to obtain secured loans in the future.
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    Re: USSC declinesChrysler Bondholder Case

    Quote Originally Posted by Kandahar View Post
    That may very well be true, but there is a right way to do things and a wrong way to do things. You don't give unsecured creditors priority over secured creditors, regardless of how good the deal is. This threatens bankruptcy law in general, and makes it more difficult for other businesses and individuals to obtain secured loans in the future.
    I am not an expert on this, but being in the industry I follow the stories. I was under the impression the government had done an end run around that problem by throwing in money that would not have been there to benefit the union while ensuring that the rest of the creditors got at least what they would have otherwise.

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