Thursday, May 7, 2009

"Forget it, Jake - it's only a lousy auto company" (UPDATED)

(UPDATE #1): Judge to Chrysler bankruptcy holdouts: "Pound sand... and reveal yourselves!"

A US bankruptcy judge has rejected an attempt by dissident Chrysler creditors to derail the sale of the ailing carmaker’s viable assets to a group of new shareholders, including Italy’s Fiat.

Banks holding the bulk of $6.9bn in secured debt have accepted about 28 cents on the dollar in cash. But a group of about 20 investors, including Oppenheimer Funds and Stairway Capital, refused on the grounds that they were being strong-armed into concessions by the Obama administration.

They argue that the current deal strips them of their rights and runs counter to normal bankruptcy proceedings because it does not honor their senior claim on Chrysler’s assets.

Judge Gonzalez also ruled on Tuesday that the non-Tarp lenders must disclose their identities. They had earlier resisted on the grounds that some had received death threats.

Nice to know that due process and just compensation have been thrown out the window in the name of political expediency.

Congressional and Treasury meddling, death threats, public dress-downs by the Administration... is it any wonder that private money is sitting out the recovery effort? Would you put your money into a system where no one really knows the rules?

(here endeth the update)

Feared to be going the way of AIG execs, the bond holders who have objected to the “cram down” Chrysler bankruptcy deal because they are getting a raw deal as compared to the unions, dwindled from 20 to 9. The resulting debt owned by the holdouts has thus dwindled from $1 billion to $295 million of the $6.9 billion in secured debt.

This, after the President chastised them for having the temerity to question the legality of the deal (and sue) as per the 5th amendment (due process and just compensation), death threats and a report that the Administration was going to sick the White House press corps on these unpatriotic dissidents.

This kind of reminds us of the farmers up in the Owens Valley being swindled out of their land by representatives of the Metropolitan Water District in order to bring water to Los Angeles back in the early part of the last century. Well, it reminds us of that except for the unconstitutionality, public belittlement and potential character assassination parts…. other than that, yeah, pretty similar.

P.S. Apologies for the oblique referencing. The Owens Valley land grab provided the historic backdrop for the classic Chinatown and Jake Gittes, played by Jack Nicholson, was the hard-boiled detective trying to make sense out of the non-sensical.


K T Cat said...

Great analogy. Over at the 'Post, one commenter suggested that this was more Peron than Mussolini. We'll be exploring that angle shortly.

Dean said...

KT, thanks!

I saw that comment. I look forward to your break-down.