Dissident lenders gave up...

[Martin]

Looks like the group of lenders that sent Chrysler into bankruptcy have given up. Things should move along much more quickly now - having them out of the way definitely removes a lot of hassle and can make the emergence from BK much cleaner.

It seems like a waste to me. They held less than 4% of the total debt, but they were still able to force the bankruptcy. If bankruptcy was such a good solution, would they have been happier if the government decided to not put any TAXPAYER money into Chrysler and let it go Ch 7? In that scenario they would have gotten much less than the $0.30 on the dollar that was on the table to keep Chrysler out of BK. Instead, they got greedy and wanted a bigger return than what the TAXPAYERS had funded for them and put on a silver platter for them - and now we're losing jobs, dealers, suppliers, etc. Dumb-a$$es...

 

[gb66gth]

Amen to all that.

 

[fluffy]

Terrible. We would have been much better off if Chrysler had gone into bankruptcy without a dime of taxpayer money (it wouldn't have been chapter 7). These creditors are entitled BY LAW to $1.00 on the dollar. They didn't get greedy, they were simply following what the law stipulates in these matters. Of course the idiot in the White House doesn't care about the law, he just wants as much power to go to the unions as possible as we can see so plainly in this debacle.

This has undermined the very basis of contract law in this country. Not that we should have expected anything else from the most corrupt White House in US history, but it's still disappointing to see.

 

[Martin]

Terrible. We would have been much better off if Chrysler had gone into bankruptcy without a dime of taxpayer money (it wouldn't have been chapter 7). These creditors are entitled BY LAW to $1.00 on the dollar. They didn't get greedy, they were simply following what the law stipulates in these matters. Of course the idiot in the White House doesn't care about the law, he just wants as much power to go to the unions as possible as we can see so plainly in this debacle.

This has undermined the very basis of contract law in this country. Not that we should have expected anything else from the most corrupt White House in US history, but it's still disappointing to see.

I'm not so sure that is true. If they had gone into bankruptcy before any taxpayer money was put in to shore up the company, it would have been an unstructured BK and because of the debt to equity ratio, I don't see how they could have swung a Ch 11 filing. They most certainly would have been forced to liquidate to satisfy the secured debt obligations as best they could. In looking at the post liquidation asset values (probably 10 to 20 cents on the dollar) those creditors would have been worse off than they are now. Plus, tens of thousands of jobs would be lost instead of the hundreds/thousands now.

In the end, if those creditors really thought that they were better off by banding together and making trouble for this reorganization, they clearly would have done so. But, they didn't. Now, if they only had a bit of foresight and had thought the situation through to where it is now, they never would have forced the Ch 11 in the first place and I believe this would have worked out a LOT better for many workers and dealerships.

Let's also not forget that those are accedited investors who bought very high-yielding secured bonds in a troubled company - at a discount. I've made my share of hail-mary plays in my day, and believe me, they knew what risk they were taking on. They're getting what they're owed, and they have insurance to cover most of their losses. I'm not shedding a tear for them at all.

 

[NI-KA]

The banks/creditors are you and me the ones who hold the debt. The debt holders were/are fighting for our rights since we/or you/or someone else holds this stuff in retirement accounts etc. In the end "we" get stuck holding the bag just like we are getting stuck for holding 2 trillion dollars worth of useless government programs. But, lets not forget that Obama (One Big Axx Mistake America) just cut 17 Billion dollars out of 2 trillion in additional spending - what a joke!

 

[Martin]

The banks/creditors are you and me the ones who hold the debt. The debt holders were/are fighting for our rights since we/or you/or someone else holds this stuff in retirement accounts etc. In the end "we" get stuck holding the bag just like we are getting stuck for holding 2 trillion dollars worth of useless government programs. But, lets not forget that Obama (One Big Axx Mistake America) just cut 17 Billion dollars out of 2 trillion in additional spending - what a joke!

Correct me if I'm wrong, but here's how I understand it. Because of the BK, there is no bag left for us to hold. Those billions that we, as taxpayers, put into Chrysler were wiped out as part of the BK proceedings. That is what really makes me mad. A small dissident shareholder group with $225 million worth of bonds forces a bankruptcy that leads to the vaporization of many billions in taxpayer dollars. Outside of bankruptcy, I think it would have been entirely possible for Chrysler to restructure so that the money lent to it by us, the taxpayers, would eventually be repaid - or at least have a fighting chance of repaying some of it. Now, there's just 0% chance of that happening.

 

[fluffy]

There was never any doubt that Chrysler would go into bankruptcy and the government knew it. Getting the taxpayers on the hook was just a way to give the government leverage when it came to the actual proceedings and, I must say, elicit responses such as yours to cover their crime. Bankruptcy wouldn't have wiped out the investment, it would have just turned the company over to the creditors. If Chrysler had gone into chapter 7, the senior creditors still would have gotten their money back as the assets were liquidated.

In any case, the senior creditors would have been in a much better position than they are now with a measly 29% and no interest in the company at all. You can talk all you want about opportunism and sure, it was speculative, but that doesn't change the fact that the law is on their side. If the government can just void any contract it doesn't happen to like (and get away with it), we're in trouble.

 

[Martin]

There was never any doubt that Chrysler would go into bankruptcy and the government knew it. Getting the taxpayers on the hook was just a way to give the government leverage when it came to the actual proceedings and, I must say, elicit responses such as yours to cover their crime. Bankruptcy wouldn't have wiped out the investment, it would have just turned the company over to the creditors. If Chrysler had gone into chapter 7, the senior creditors still would have gotten their money back as the assets were liquidated.

In any case, the senior creditors would have been in a much better position than they are now with a measly 29% and no interest in the company at all. You can talk all you want about opportunism and sure, it was speculative, but that doesn't change the fact that the law is on their side. If the government can just void any contract it doesn't happen to like (and get away with it), we're in trouble.

I'm not saying I'm a fan of how this played out - but I do believe that we would have been much worse off if the automakers were just allowed to crumble. The ripple effect would have devastated the country. For better or for worse, this seems to be a case of the government acting in the greater good of the country. Believe me, I wish it didn't happen - I wish gas prices hadn't skyrocketed and changed the car buying behavior of the US consumer, I wish the mortgage meltdown didn't happen to cause the wave of foreclosures that is crippling the economy, I wish we weren't spending god knows how much on two wars. But we were and are in a bad situation all around, and we'll just have to see how it all plays out. There are signs that things are coming back together, and I'm encouraged by that.

The government can't just void any contract that they want to, but it has been known to do a lot worse than what happened in this situation. Think about being drafted into war - don't we all have the right to life, liberty, and the pursuit of happiness? I don't see much of that happening when you're drafted, and I don't think a single contract attorney would win that case... What about eminent domain? If your farm is sitting in the way of an interstate - bye bye homestead... But, we are still the greatest country on the planet, and we got here somehow. I wouldn't say it was luck - it was we, the people, and our elected officials that got us here and hopefully keep us here. We have the right to disagree with what is going on, but we should also keep some faith.

 

[fluffy]

I think we would have been much better off allowing the automakers to enter bankruptcy, and I think the ripple effect would have been relatively minor. The last estimate I saw was 1.2 million people would have been out of work if the automakers had all completely collapsed (which wouldn't have happened), which would have been, what, another 1% unemployment? That's not too bad considering that we're already pushing 9%, and that hasn't devastated the country.

Plus, putting Chrysler and GM into receivership would have allowed them to get rid of all of the union baggage they've been saddled with. They would have emerged leaner and meaner, and more competitive then they've been in decades. Now thanks to government meddling they're actually owned by the very organizations responsible for their failure.

Oh well.

As far as Chrysler is concerned, I think most of us can agree that we wouldn't be in this situation if Daimler had kept its lousy butt in Germany.

 

[Paul Hawker]

Another way to think about this is that 1.2 million people were working on an industry that has ceased to be profitable. Such an industry should either be reconstructed to allow for profitability, or slowly wound down and allow those people to begin working for profitable businesses.

The big three made some wonderful cars and trucks and had a well trained and productive work force, but they became unable to bear the increasing burdens of union contracts, health care, governmental regulations, clean air and mileage regulations, environmental restrictions, and retiree benefits. They finally crushed under the burdens heaped upon them.

 

[GTS Bruce]

RIP Chrysler and GM too. NO way would any of you take 30 cents on the dollar if it were your money and you were entitled by law to more. Lots of people out there are holding bonds that they planned to use the dividends to pay house payments,retirement,college for kids....... NO way settle for 30 cents on the dollar while giving the company to Obama and the UAW. GTS Bruce

 

[k4site]

The bonds holders got screwed, the union came out great. I guess it payed to get OBAMA elected.

 

[Martin]

I don't want to continue beating a dead horse, because once someone's mind is made up about something, I respect that. I do have a Machiavellian attitude to this situation where I believe the end justifies the means. If the car makers are allowed to go under in an unstructured way, it's game over for the US auto industry for a LONG time. Starting them back up again isn't as easy as if you let your neighborhood pizza place shut down and then reopen under new ownership. Those assembly lines, supplier contracts, and skilled workforce assets are very perishable. If they're idle for more than a couple of months, the whole house of cards falls down and it might not be financially viable to put it back together.

It goes back to doing the right thing and doing "what's right". I personally agree that the bond holders have the right to exercise all of their rights and get what they can, but after looking at the big picture, it just wouldn't be right to let the automakers go through any more 'reorganization' than they currently are. I'm probably beating a dead horse, but a dead horse feels no pain...