The Chrysler Plan

[Tilted]

Chrysler dissident lender group disbands

This really is very, very sad. I can understand why some of these people aren't willing to fight the good fight any longer - they weren't gonna win.

After all, all they had on their side was right, any notion of fairness that ever existed, the rule of law, centuries of legal bankruptcy principles, the desire to have the notion of secured credit ever mean something again, and the hope for an outcome that might not significantly compromise credit markets, and business operations in general, going forward. The government had, well, the government on its side - with its flagrant disregard for the rule of law, and all of its sordid, heavy-handed tactics and sleazy, disingenuous PR tricks.

Once again, it would be hard for me to overstate what has been lost, by all of us - by America and all that she stands for - in this disgraceful, disheartening episode. And, as for the press, which doesn't seem to have properly explained the situation to the masses - shame on them.

The message should be loud and clear though - do not find your interests at odds with the goals of this Administration. Because, if you do, you may well get run over, with little more than a skid mark left to memorialize what happened.

 

[Tilted]

A Case of Gangster Government? - Video

An interview with Thomas Lauria. I wish MCC had let him finish, instead of cutting him off.

 

[Tilted]

List of proposed Chrysler dealership closures

I don't see any in southern MD (or what I would consider So. MD).

 

[Larry Gude]

washingtonpost.com

The Obama administration's agenda of maximizing dependency involves political favoritism cloaked in the raiment of "economic planning" and "social justice" that somehow produce results superior to what markets produce when freedom allows merit to manifest itself, and incompetence to fail. The administration's central activity -- the political allocation of wealth and opportunity -- is not merely susceptible to corruption, it is corruption.

 

[Larry Gude]

A Case of Gangster Government? - Video

An interview with Thomas Lauria. I wish MCC had let him finish, instead of cutting him off.

Well, she had a goal; get him to say 'this was a threat, that was a threat...' when there is no way he could do that precisely for the reasons he stated in his opening; minimizing the THREAT to their business's being involved in controversy.

She was so close to doing a good piece, there. If only she could have avoided sounded like some lawyer "So, you didn't ACTUALLY see Godzilla make that foot print so, how do we know it's really his, huh?"

 

[Tilted]

Robert Kidder Is Named Chairman of Chrysler

The news came after a judge declined to postpone Chrysler's bankruptcy to allow a district court to hear arguments about whether the U.S. government exceeded its authority in the reorganization of the automaker earlier in the day.

An attorney for three state retirement funds from Indiana requested the bankruptcy hearings be postponed until a district court could determine if the U.S. government acted legally in the Chrysler bankruptcy.

 

[Tilted]

Tony Fratto: In Chrysler Bailout, Will Obama Bully Teachers And Cops, Too?

About Those 'Speculators' . . . - WSJ.com

Remember how President Obama blamed Chrysler's bankruptcy filing last month on "a small group of speculators" who turned down Treasury's $2 billion final offer for their $6.9 billion in debt? Well, it turns out that hedge funds and other short sellers weren't the only secured creditors who got a raw deal from Uncle Sam.

Indiana Treasurer Richard Mourdock revealed this week that his state's police and teacher pension funds have lost millions of dollars in the Chrysler "restructuring." Indiana's State Police Fund and Major Moves Construction Fund, which finances roads and bridges, together lost more than $1 million. And the Teacher's Retirement Fund "suffered, at a minimum, a loss of $4.6 million due to the action of the Federal government," reports Mr. Mourdock.

Far from being speculators, these funds represent retired public employees, including cops and teachers. The funds paid a premium to buy "secured" status, only to discover that they were politically outranked by the United Auto Workers in the White House hierarchy.

"In the past, to be 'secured' meant an investor was 'first in line' in the event of a bankruptcy and 'non-secured' creditors would receive value after secured-creditors were paid," Mr. Mourdock says. "In the Chrysler bankruptcy, however, secured creditors received $.29 on the dollar even as non-secured creditors received higher values and ended up with a 55% ownership of the new company, which is fundamentally wrong and a dangerous precedent to the capital markets."

Chrysler creditor group asks court to appoint examiner | Reuters

In bankruptcy court papers, the group of pension funds asked that a Chapter 11 trustee be appointed to manage the case due to what they claim is too much control by the federal government.

"The government has exceeded its authority, caused the debtors to breach their fiduciary duties, dominated and controlled all of the key decisions and assessments the debtors are required to make, and otherwise utilized this bankruptcy process to advance its own agenda at the expense of the debtors' estates," the pensioners said in a filing with the U.S. Bankruptcy Court in New York.

I'm glad that someone finally had the courage to put a face on this travesty, other than that of those evil secured debt-holders who wouldn't originally consent to having their client's money stolen by a government sponsored subversion of the law.

 

[Larry Gude]

I'm glad that someone finally had the courage to put a face on this travesty, other than that of those evil secured debt-holders who wouldn't originally consent to having their client's money stolen by a government sponsored subversion of the law.

You've been doing a good a job as anyone reporting on this stuff.

 

[Tilted]

You've been doing a good a job as anyone reporting on this stuff.

Thanks Larry, I appreciate that. But, I'm not trying to be a reporter - just trying to do my small part to combat insanity with reason.

The latter's been taking a beating for quite some time now.

 

[Larry Gude]

Thanks Larry, I appreciate that. But, I'm not trying to be a reporter - just trying to do my small part to combat insanity with reason.

The latter's been taking a beating for quite some time now.

Well, you are reporting, so there. It's nice, given the tedious nature of this stuff, that someone takes the time to wade through, provide good links and tries to summarize and cover the key points of what would otherwise be what I think they want it to be; a paper blizzard that no one cares to pay much attention to.

This stuff is criminal. This is where the courts MUST provide their check and balance function on an executive that is making Bush look like the epitome of constitutional restraint not even bothering, as Bush did, to at least get opinions to support what he's doing.

It's bad enough that, frankly, they may well be thankful to be taking a beating or torture while all this is going on because it absorbs so much of the attention.

Incredible.

 

[Tilted]

This article is a few weeks old, but it references a letter written by (hedge fund manager) Clifford Asness, which expresses some sentiments that I think are shared by most of those who understand this situation, but which most seem to be scared to express. The CBS article also makes the rather obvious suggestion that this whole deal is just political payback for a loyal constituency.

Chrysler Bankruptcy Exposes Dirty Politics - CBS News

Our story begins with the slow downfall of Chrysler, which succumbed to bankruptcy after experiencing a steep sales decline of 48 percent in one year. During its slide, Chrysler borrowed money from lenders and in return signed a contract promising that as so-called senior creditors, they'd get paid before anyone else if the company went under.

These creditors, by the way, represent something of a cross-section of America: the University of Kentucky, Kraft Foods' retirement fund, the Bill and Melinda Gates Foundation, pension funds, teachers' credit unions, and so on.

A normal bankruptcy filing would be straightforward. Senior creditors get paid 100 cents on the dollar. Everyone else gets in line.

But President Obama and his allies don't want that to happen. So they interfered on behalf of unions (the junior creditors) and publicly upbraided the senior creditors who were asserting their contractual rights and threatening to head to bankruptcy court.

...

It must be a coincidence that the United Auto Workers has handed $25.4 million to federal politicians over the last two decades, with 99 percent of that cash going to Democrats. And that Mr. Obama's final campaign stop on Election Day was a UAW phone bank.

If those politicians thought about this a bit more, they'd probably realize their mistake. Creditors didn't force Chrysler's management to head to the capital markets and beg for funds: It was poor management, uncompetitive wages, and a union that opposed pay cuts.

Without those greedy "vultures" and "rogues" injecting sorely-needed cash into a business they knew was risky, Chrysler might have been forced to declare bankruptcy much earlier. (And now that lenders know they may be demonized by the president, will they be as likely to help out next time?)

One of the better critiques of this unusual situation comes from Clifford Asness, managing partner at a $20 billion hedge fund named AQR Capital Management. His essay responds to what he called "toxic demagoguery" and says "the president's attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him."

Clifford Asness' letter

He concludes his very critical letter thusly,

I am ready for my “personalized” tax rate now.

 

[Tilted]

I'd also like to restate something that I'm sure I've stated before. Talking to people over the weekend, I realize that some people (intelligent, well meaning people) are still significantly mislead about this whole situation. They seem to have accepted this notion that the debt-holders should be happy because they were helped by the auto bailout to begin with - that the bailout was, in a way, a bailout of them.

I want to make this clear - that is absolutely not the case. By and large, the debt-holders of GM and Chrysler (GM's 'bond-holders', Chrysler's 'secured debt-holder', and even the UAW VEBA accounts) were not helped by these bailouts originally - they were hurt. Even if it were not for the inappropriate shenanigans going on now, what we did to them, by virtue of doing these bailouts, was unconscionable. Effectively, we allowed the companies to keep taking their money and burning it, instead of having to begin returning to them whatever was left of it. That transgression is on Bush, just as the current transgressions are on Obama.

So, this notion that the debt-holders should stop complaining, because they have been helped by these bailouts, is preposterous. Worse than that, it is an intentional fraud, designed to obscure the reality that this Administration's behavior is (almost) indescribably horrendous.

 

[Tilted]

Pension funds lose Chrysler fight in district court | Deals | Reuters

 

[Tilted]

We are expecting a ruling today on the proposed sale of most of Chrysler's assets and liabilities to New Chrysler, and essentially, the merger with Fiat. I don't expect a good outcome on this. If the court approves this sale, that will basically be the official death of the rule of law - the judicial branch having signed off on the same. I guess there is still hope, but it will take a death bed miracle at this point.

Still, more interesting insight is coming out of the testimony. As we had expected, the Administration doesn't seem to have been all that interested in making a deal work or avoiding bankruptcy. They just wanted a scapegoat. They didn't want the American people asking, 'Why did we give this company money again? I thought it was to avoid bankruptcy. If they have to go through bankruptcy anyway, what's the real reason behind our involvement?'

Chrysler Hopes For Friday OK to Sell Assets to Fiat

Opponents of the sale, which include debtholders, suppliers and dealers that will be closed, have been using testimony from executives and advisers of Chrysler and Fiat to show they could have avoided bankruptcy or offered more to creditors.

Attorneys have also zeroed in on the role of the government's Auto Task Force, which appeared from emails read in court to have cut short last-minute negotiations and favored a bankruptcy.

"It's over," read one email from a task force member to a Chrysler adviser who suggested ways to reach a deal with debtholders hours before a government deadline.

"The president doesn't do second-round negotiations." Chrysler attorneys led witnesses to describe the stark realities of a market in which demand plummeted by nearly half in the course of a year as a deep recession and financial crisis swept the United States.

 

[Tilted]

Well, it's official. RIP rule of law. You had a good run, but all good things must eventually come to an end.

Chrysler gets judge's approval for asset sale | Reuters

NEW YORK/DETROIT (Reuters) - A U.S. bankruptcy judge on Sunday approved the sale of substantially all of U.S. automaker Chrysler's assets to a group led by Italy's Fiat SpA hours before an expected bankruptcy filing by General Motors Corp.

Judge Arthur Gonzalez approved the $2 billion sale of the assets to a new company that will be 68 percent controlled by a healthcare trust aligned with the United Auto Workers union.

Fiat will control 20 percent, the U.S. and Canadian governments will control the other 12 percent.

In his written opinion Judge Gonzalez said the only alternative to approving the sale was the "immediate liquidation" of the company and that he was concerned about saving the value of Chrysler as a continuing operation.

"Indeed, because of the overriding concern of the U.S. and Canadian governments to protect the public interest, the terms of the Fiat Transaction present an opportunity that the marketplace alone could not offer, and that certainly exceeds the liquidation value," Gonzalez wrote in a 47-page opinion.

With all due respect to Judge Gonzalez, what he is saying here simply isn't true. He has allowed himself to be a tool of this Administration's agenda, and a facilitator of its tyrannical tactics. It is a very sad day.

Judge Gonzalez did not accept arguments by dealers that new Chrysler was unfairly rejecting their dealership franchises, saying that such decisions are allowed in every bankruptcy case, would give the new company the best shot at survival, and that government involvement should not make this case any different. He noted another hearing on dealer contracts is set for this Wednesday.

He also rejected several arguments brought by the Indiana pension funds against the deal.

Judge Gonzalez wrote that the deal does not violate the typical order of bankruptcy repayments, and it was not a "sub rosa" plan of reorganization masquerading as a sale, because "not one penny of value" of Chrysler's assets was going to anyone but its senior lenders, who are receiving $2 billion, or 29 cents on the dollar. Other parties like Fiat, the union and the government are receiving stock in the new company.

Again, his statements are simply wrong. He may have phrased them such that they are technically defensible against an assertion that they are lies, but they are lies nonetheless.

 

[Tilted]

US Court to Hear Appeal on Chrysler's Sale to Fiat

 

[Tilted]

Appeals Court Conditionally Approves Chrysler Sale to Fiat

A U.S. appeals court said Friday it would conditionally approve Chrysler's sale to Fiat but is keeping the deal on hold until Monday to allow an appeal.

The 2nd U.S. Circuit Court of Appeals said it will block the sale until 4 p.m. EDT Monday unless the U.S. Supreme Court declines to hear appeals from objectors.

The appeals court heard arguments Friday from attorneys representing Chrysler LLC, Fiat Group SpA and a trio of Indiana state pension and construction funds, the latter of which say the deal approved by a bankruptcy judge unfairly favors the interests of the company's unsecured stakeholders ahead of those of secured debtholders such as themselves. "I would ask the court to view this as standing the bankruptcy process on its head," Thomas Lauria, an attorney for the Indiana pension funds, argued before the court.

The 3-judge panel of the appeals court asked Glenn Kurtz, another attorney for the Indiana pensions, if his colleagues were preparing to file paperwork with the U.S. Supreme court. "You would presume correctly," Kurtz said, prompted laugher in the court room.

The bad news is that the 2nd Circuit is Justice Ginsburg's Circuit, so an initial application (presumably asking for a stay) will be directed to her.

 

[itsbob]

It'll be interesting to see how the UAW views profit and loss statements now that it is their P/L.

interesting, I had the same thought.

How will the Union feel about a lugnut turner making 100K a year when it's THEIR profits he's eating..

Or paying full pay and benefits to laid off workers, when it's THEIR profit he's eating and drinking while ;aying on the couch at home watching TV..

Will be interesting to watch how much 'workers rights' change now that the union has a vested interest in the health of the company NOT the health of the workers.

I in no way support what was done in getting to this point, and it reeks of what Chavez has done in his country..

How many of us sat in disbelief as he took over the oil industry in his country, but nothing but crickets while our President does the same things here?

 

[Tilted]

This entire article is worth reading, but I didn't want to quote the entire thing. Slowly, the truth comes to light. Our government feels that it is entitled to behave like gangsters, and nothing - I mean nothing - will get in the way of what they think should be done.

As I have suggested before, this Administration wanted bankruptcy for both of these auto companies - they needed it in order to be able to deal with the dealerships - they just wanted scapegoats (the debt-holders) for GM and Chrysler going into bankruptcy. The money owed to Chrysler's secured debt holders, and most of that which was owed to GM's bondholders, was not current - so those debt-holders could not force bankruptcy on the auto makers, even if they wanted to. The Obama Administration forced bankruptcy, because it basically said - 'Either you screw those debt-holders, or we won't give you anymore taxpayer money.' This whole thing is so seedy, so vulgar - every single American should feel dirty that we are letting it happen.

If you wonder why the Administration wants to give Chrysler's manufacturing mechanism to Fiat so bad, it is because they want Fiat to bring its fuel efficiency technology here, to produce the kinds of cars that the Administration wants Americans to buy. That's fine, but our government shouldn't be allowed to subvert the law, and bully people, and steal from people, to make that goal happen.


U.S. Pushed Fiat Deal on Chrysler - WSJ.com

WASHINGTON -- The Obama administration rushed an alliance between Chrysler LLC and Fiat SpA despite Chrysler's worries about Fiat's financial health and its willingness to share technology, according to internal company emails.

The emails show Fiat ignoring requests for documents and trying to change contract terms late in the talks. One Chrysler adviser said the company had become a guinea pig for the government to display its toughness. Another top executive referred to the U.S. Treasury Department as "God."

The documents, filed in the Southern District of New York as part of Chrysler's bankruptcy proceedings, provide a glimpse at the tense debates that shaped Chrysler's final days as it raced to find a suitor.

...

In early March, both Chrysler and the government seemed unsure about Fiat. In a March 10 letter to the Treasury auto team, Chrysler Chief Executive Robert Nardelli said he shared some of the government's worries about a Fiat alliance, including that the introduction of Fiat in the U.S. "may have a negative impact" on General Motors and Ford. We are giving foreign competition a ready-made, U.S. taxpayer financed opportunity to come here and compete with our own auto industry. I thought we were trying to help our auto industry, not hurt it?

Mr. Nardelli also noted how Treasury officials had complained Fiat was "not bringing enough to the table" and had to be forced to put up cash for an equity stake.

A Chrysler spokeswoman said Mr. Nardelli wouldn't comment beyond his affidavit. In the affidavit, he said that by April's end, "Chrysler's management became comfortable with entrusting our precious assets to Fiat." Of course they did, they were told by the Administration that they had no choice but to be comfortable with it.

...

At the outset, the Chrysler team appeared leery of the role being played by the Treasury, which was leading the effort to save the auto maker. "I think we are clearly getting more cooks in the kitchen," Mr. Nardelli said in an email.

However, Chrysler quickly learned to defer to the Treasury team. In one email chain, Ron Bloom of the Treasury chastised several Chrysler officials for trying to hammer out some lingering issues with Daimler, Chrysler's former partner, without looping in the Treasury.

"I am more than a little surprised," Mr. Bloom wrote, that Chrysler was proceeding "without our approval."

Mr. Nardelli jumped in: "Ron, thought we were helping, how would you like to handle!"

Later, the Chrysler executives deleted Mr. Bloom from the address line, and continued talking. "I guess the UST is running it!" said Mr. Nardelli, referring to the Treasury.

...

Just before the filing, tensions boiled over. Mr. Manzo offered a suggestion to Mr. Feldman about making a last-minute offer to Chrysler's debt holders. "I'm now not talking to you," Mr. Feldman wrote back.

The next morning, hours before President Obama announced the bankruptcy, Chrysler President Mr. LaSorda emailed Mr. Manzo asking if Chapter 11 filing was inevitable.

"Not good," Mr. Manzo replied. "These washington guys want to show the market (gm, delphi....) that they can be tuff. We are the gueni pigs unfortunately."

 

[itsbob]

This article is a few weeks old, but it references a letter written by (hedge fund manager) Clifford Asness, which expresses some sentiments that I think are shared by most of those who understand this situation, but which most seem to be scared to express. The CBS article also makes the rather obvious suggestion that this whole deal is just political payback for a loyal constituency.

Chrysler Bankruptcy Exposes Dirty Politics - CBS News



Clifford Asness' letter

He concludes his very critical letter thusly,

VERY good article. VERY good argment..

Where are the naysayers and Obama supporter to point out our folly in belieiving any of this to be true??

Camily??

Nono??