Chrysler Bankruptcy Repercussions

[del]

Secured by what, exactly?

Had they been secure they wouldn't have had to go to court.

Debtors have to stand in line when a company goes down, and the courts decide what percentage of the corpse each debtors gets

They're damned lucky to have gotten 29% back, I suspect.

'Chrysler was broke

The fair thing to have done was to give Chrysler to her debtors.. by rights they owned her.

That's essantially what they're doing by giving stock to the penisoners who are ALSO creditors of the corporation.

I'm fairly certain that the other creditors could have elected to take what they were owed in stocks had they chosen that course.

seems not everyone thinks it's a good deal or legal. damn fiduciary responsibility...

"Three of Chrysler’s secured creditors are mounting a fresh attempt to thwart the carmaker’s Chapter 11 reorganisation on the grounds that it violates their legal rights and the US government’s authority under the Troubled asset relief programme.

The three – all Indiana state pension funds – are among a group of 46 creditors that had appeared to back away this month from efforts to derail the process under which a “new” Chrysler would emerge from bankruptcy protection by July 1. The new entity would be owned by a union healthcare trust, the US government and Italy’s Fiat"

FT.com / Companies / Automobiles - Funds move to halt Chrysler restructuring

 

[Zoomie1980]

Unions WON in scrapping the rule of law, but in the long run?

Fund Managers Burned by Obama Now Say They Are Wary (Update3) - Bloomberg.com

Fund Managers Burned by Obama Now Say They Are Wary (Update3)
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By Caroline Salas


May 20 (Bloomberg) -- Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression...

To a degree, yes. Not all, old-line companies have unions that are as totally out of control as the UAW. Better run unions do NOT want their employers to be uncompetative and are realistic about keeping benifits reasonably limited. Investors are going to be VERY particular as to the long term health of pension funds.

The UAW trading cash for stock is interesting. Never before has a union's livelihood been so tightly intertwined with fortunes of it's parent companies. If those companies are not competitive with Toyota and Honda they know they will ultimately die and no amount of taxpayer bailouts will save them next time.

 

[JW Frogen]

I once owned a Colt. I moved to London and the parking was atrocious, the steering wheel problem irritating. However I owed more than I could sell it for in the UK. A freind suggested I leave the car in a parking lot in Tower Hamlets and report it stolen, which I did.

Do you know I went back 3 months latter and the car was till there! They make such crap even the down and out crowd won't steal it.

 

[Ame®icano]

That's essantially what they're doing by giving stock to the penisoners who are ALSO creditors of the corporation.

I'm fairly certain that the other creditors could have elected to take what they were owed in stocks had they chosen that course.

Key word is "giving". Steeling from one to give to others?

Check this graph, source is WSJ.

While Daimler, Cerberus and US Gov are losing 100% or their investment, US banks 71% of their investment, UAW is losing 57% of their investment.

Daimler, Cerberus and Banks get no stake in the company, while UAW and US government get 63% of ownership, and Fiat gets 35% of ownership with basically no money invested.

And you are saying that is right thing to do?