Can’t fight Obama: Dissident Chrysler creditors surrender
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And then there were none: The group of Chrysler secured creditors that had objected to the Obama administration’s debt-restructuring plan for the automaker has given up.
From Bloomberg News:
The group, calling itself Chrysler’s Non-TARP lenders, doesn’t plan to defend earlier objections and may withdraw them formally, said Tom Lauria, the White & Case attorney representing the group. ‘After a great deal of soul-searching and quite frankly agony, they concluded they just don’t have critical mass to withstand the enormous pressure and machinery of the U.S. government,’ he said. The opposition group argued that a plan to sell Chrysler’s best assets to a new company controlled by Fiat for $2 billion violated contract law because unsecured creditors, such as a United Auto Workers union health-care trust fund, were preserved ahead of claims made by secured lenders.
One member of the group, OppenheimerFunds, put out a statement earlier today:
Given the reduced number of senior creditors willing to continue to pursue an alternative to the Federal Automotive Taskforce’s proposed settlement, OppenheimerFunds has determined that the senior creditors can no longer reasonably expect to increase the recovery rate on the debt they hold by opposing the Taskforce’s restructuring plan. Therefore, OppenheimerFunds has withdrawn from the Chrysler Non-TARP Lenders Group and will adhere to the determinations of the U.S. Bankruptcy Court.
President Obama had publicly bashed the dissident creditors last week, calling them ‘a group of investment firms and hedge funds [that] decided to hold out for the prospect of an unjustified taxpayer-funded bailout.’
The creditors asserted they were just trying to protect their rights under the law.
-- Tom Petruno