The Chrysler Plan

Tilted

Tilted

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Some of the emails between Chrysler and people from the Auto Task force

This is our government? This is how it behaves? And, then Obama marches out in front of the American people and lies to them about the situation?

They did not want to avoid bankruptcy - that's why they made the ridiculous offers to secured debt-holders that they did. Everyone involved knows this whole thing was a show. This was our government wanting to prove how big its #### was. Sometimes you do have to do that - but this wasn't one of those times - they were in the wrong here. When people NEED to prove how big their #### is, just to do it, it usually means they have fundamental insecurities.

If this is how immature - how petty and vindictive - our government is in emails (which they know might later be seen by everyone), just imagine how they act when there is no record of their behavior.

They didn't' want 'to have to bend to a terrorist like Lauria'. The terrorist, Lauria, is the lawyer who dared to represent the secured debt-holders who didn't want to agree to letting their clients money be stolen - those naive fools who still thought the notions of law, and fair play, and good faith negotiations meant something.

Lauria wasn't even demanding a 'fair' deal. He just wanted something in the neighborhood of something that looked like something that was close to something in the ballpark of something that was on the track to being reasonable and fair (and legal). They (our government actors) didn't want to give them anything, they just wanted the satisfaction of knowing they screwed them as hard as they could get away with screwing them. As I said, they needed to prove how big their ####s were. That's our government.
 
Tilted

Tilted

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Supreme court asked to delay Chrysler sale | U.S. | Reuters

Indiana pension funds applicaiton for stay to Justice Ginsburg

According to that application, the adviser who created the (BS) liquidation analysis on which the justification for the Chrysler sale is premised, is to receive a $10 Million contingency fee IF the bankruptcy sale is successful. In other words, if he wrote an analysis showing that the company is worth very little in a liquidation, and convinced the court that this restructuring deal is fair to the secured debt-holders (because they couldn't get more if the company was liquidated), then he gets $10 million. He's the person who was supposed to objectively analyze what the company would be worth in liquidation. :lol: And, as I said when I first read the analysis, it's a complete crock of you know what.

Regardless, it shouldn't matter what it is worth in liquidation, because they aren't liquidating it. It is being sold as a going concern. So, what matters is what it would be worth if sold as a going concern, which is substantially more. The valuing mechanism was preposterous to begin with, and then it was insincerely implemented.

Furthermore, according to that application for stay, their sale terms, which the bankruptcy court approved, required potential bidders (other than Fiat and the UAW, the owners that our government had chosen) 'to submit final and binding bids, with no financial or due diligence contingency, in less than two weeks'. Anyone who has ever been involved in a decent size deal (say a real estate development deal), let alone a deal of this size and complexity, knows that just wasn't feasible. No one is going to make a binding offer with no due diligence contingencies. Fiat had been allowed to negotiate the terms of, and research the issues surrounding, the deal for months. In other words, the sale terms were devised such that there was no way someone else could offer more value for Chrysler's operations and assets (in which case the secured-debt holders would have gotten more, if not complete, recovery), as should have been allowed in this bankruptcy situation.

This game was rigged at every step along the way.
 
Larry Gude

Larry Gude

Strung Out
Tilted said:
This game was rigged at every step along the way.
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And the question is, at what point do people start making the law stand up?

Obviously, there is profound political pressure to just look the other way, but, it seems to me that the long term ramifications for contract law are even more profound.
 
Tilted

Tilted

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Details aren't clear yet (even to the applicant, the Indiana Attorney General, who I just saw interviewed), but the Supreme Court has extended the stay which was to expire today at 4 pm. The stay puts the bankruptcy sale of Chrysler to 'New Chrysler' on hold.

It's hard to know what this means, but it may just be that Justice Ginsburg wants a little more time to consider the application for stay (she just got the application on Saturday or Sunday). Or, it could be that she has decided to let the entire Court decide whether or not to grant the stay. So, this may be a big deal, or it may be not much of anything. At any rate, it is better than a denial of the application, or no action at all, which would have meant the Circuit Court's stay expired - in which case, the shysters involved in this farce would likely be consummating the sale at this very moment.


EDIT: I mispoke, it was not the Indiana Attorney General whom I saw interviewed, it was the Indiana Treasurer Richard Mourdock.
 
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Pushrod

Pushrod

Patriot
I heard briefly on the news this morning that the Supreme Court okayed the Chrysler bankruptcy. This really saddens me, the last bastion of the Rule of Law in this country has turned their back on it. Goodbye to the great Republic.
 
Larry Gude

Larry Gude

Strung Out
In an article by Zach Lowe published last fall in the Am Law Daily and the American Lawyer magazine, UCLA Law School Prof. Lynn LoPucki said of the cramdown: "What happened . . . was so outrageous and illegal that until March of this year [2009], nobody even conceptualized it." The Second Circuit opinion, like the Supreme Court's refusal to stay the nationalization, went out of its way to state that the ruling did not reach the substantive issues raised.
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Criminal.
 
Larry Gude

Larry Gude

Strung Out
Chrysler entered and exited bankruptcy in 42 days, making it one of the fastest major industrial bankruptcies in memory. It entered as a company widely thought to be ripe for liquidation if left on its own, obtained massive funding from the United States Treasury, and exited via a pseudo sale of its main assets to a new government-funded entity. The unevenness of the compensation to prior creditors raised considerable concerns in capital markets, which we evaluate here. We conclude that the Chrysler bankruptcy cannot be understood as complying with good bankruptcy practice, that it resurrected discredited practices long thought interred in the 19th and early 20th century equity receiverships, and that its potential, if followed, for disrupting financial markets surrounding troubled companies in difficult economic times is more than small.
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More than small.
 
Tilted

Tilted

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A great, succinct piece of commentary on the auto bailouts.

The new GM and Chrysler entities would likely be in better shape going forward today had the government not stepped in and seized control of (and perverted) the process. As a bonus, the rule of law and the prospects for secured lending, in specific, and investment capital, in general, might be in a tad bit better shape as well.
 
Tilted

Tilted

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Treasury to sell remaining Chrysler stake to Fiat

This move comes close to completing the great swindle: the swindle in which what was left of Chrysler was stolen from its rightful owners (e.g. its secured creditors) and given to the UAW and Fiat, with the present Administration acting as both strong-armed thief and favor-currying fence, and the U.S. taxpayer not even getting a kiss in return for its criminal facilitation - it's set to lose a billion or so dollars on the deal.

I've been known on occasion to defend the present Administration when it is inaccurately or unfairly blamed for various things. But, I struggle to overstate the unconscionability of its behavior here. If President Obama and those who acted under his authority in this matter weren't acting as the government, they might be in jail for what they did. I suppose the victims of their crimes - the pension funds and investors who've been providing Detroit with the funds that have allowed it to continue operating and employing people for so long - have only themselves to blame. How foolish were they to believe that our laws would be obeyed? How foolish of them to trust that the government wouldn't someday swoop in like a thief in the night and steal from them in order to pay off political favors and buy more political good will for the future? Fools! A nation of laws? What fairy tale book had they been reading from?

By the way, Fiat will now be the majority owner of Chrysler. Many Chrysler cars may still be American made (as many foreign-label cars sold in the U.S. now are), but the company is no longer American owned. Chrysler is now a foreign brand - we're down to the Big Two domestic auto makers.


EDIT: Corrected spelling.
 
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Tilted

Tilted

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This is from Monday, Chrysler has filed for an IPO. I wouldn't be surprised if the offering never actually happens. The parties - Fiat, which owns the majority of Chrysler, and the UAW's VEBA Trust, which owns a little over 40% of Chrysler - haven't been able to agree on a deal for Fiat to buy the rest of Chrysler, which Fiat very much wants to do. So this may just be a pricing exercise, and the process may just be used to force someone's hand.

Chrysler Feud Triggers IPO Filing - WSJ.com
 
Larry Gude

Larry Gude

Strung Out
Tilted said:
So this may just be a pricing exercise, and the process may just be used to force someone's hand.
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Yup. Depending on what the number is looking like as they get closer. The union could be unpleasantly surprised and be suddenly rushing to the table having changed their mind or, pleasantly surprised in which case Fiat won't care because the money will be there.

I figure the administration will simply offer whatever price the union wants to see and have the Fed buy.


:lol:
 
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