Chrysler creditors continue to object, claim death threats
The same creditors who President Obama scolded last week for preventing Chrysler from restructuring outside of bankruptcy have filed objections in bankruptcy court against the automaker's plan to reemerge as a new company owned in part by Fiat. Chrysler has about $6.9 billion in debt that it owes to banks and hedge funds, and those entities who hold the I.O.U. for $4 billion of that debt have already agreed to accept $2 billion and walk away happy with the knowledge that it's better than nothing. Other senior creditors led by Oppenheimer Funds and Stairway Capital are not willing to walk away from the $3 billion they're owed without a fight. These creditors are specifically trying to block or delay the court proceedings scheduled for May 21st that would allow Chrysler to sell off its assets to a newly formed company of which Fiat would own a 20% stake that will grow to 35% after certain conditions are met. The Detroit News is also reporting that some of the dissenting lenders have received death threats that are being investigated by local police and the FBI.
This all comes down to the question of what these lenders would receive if Chrysler entered Chapter 7 and was liquidated versus what it's guaranteed to receive in a Chapter 11 settlement. Chrysler and the government claim they'll get more by settling, while the creditors claim otherwise. Considering that Chrysler's reemergence from Chapter 11 bankruptcy has the full support of the U.S. government, we're placing our bet on the proposed alliance and sale of assets to an entity owned partly by Fiat going through.
[Source: The Detroit News | Photo by Scott Olson/Getty]
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Reader Comments (Page 1 of 2)
Aprime 6:07PM (5/04/2009)
Uh, isn't it the other way around normally? (in regards to the death threats)
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paul34 6:09PM (5/04/2009)
This is starting to resemble a daytime drama.
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Randy 2:11PM (5/05/2009)
Possible Titles
"As the Penstar Turns"
"One Bank at a Time"
"Guiding Light Sales"
"The Young and the Rusted"
and
"All My Children Are Up for Adoption"
Randy 2:15PM (5/05/2009)
©2009 Me (just in case) lol
Rick C. 6:12PM (5/04/2009)
Too bad. You gambled and you lost. And in some cases, your financial sleight of hand tricks took others down with you. Mere death threats should be the least of your worries maggots.
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Andy 6:15PM (5/04/2009)
Gambled? These firms let Chrysler borrow money and now Chrysler doesn't want to pay all of it back. As with all loans, there's an expectation of getting paid back.
paul34 6:18PM (5/04/2009)
Rick, I don't think you understand how this works. Shareholders will be wiped out; bondholders are generally given more priority. They have money in the company, and so they have a stake. They still have the right to complain about it if they want to. Unless Chrysler was a completely private company, these sort of things will always happen with bankruptcy.
Rick C. 6:34PM (5/04/2009)
I understand the difference. I apologize for my sharp attack. Today was not a good day at work, I was lashing out at the grabbing hands. I'm just tired of those who already have quite a bit, and yet that's not enough. They want more, at the detriment of 'normal folk' like me. Lately I've placed everyone in higher corporate or financial areas in the same arena and just blasted their greed...
compy386 6:35PM (5/04/2009)
http://biztaxlaw.about.com/od/aboutbusinessbankruptcy/f/bankruptpriority.htm
Secured debt gets paid first. They offered Chrysler loans at discounted rates to take less risk. If anything secured debt holders are last people "gambling" with their money. I don't see how it's fair to give them less than non-secured holders.
Taylor 6:37PM (5/04/2009)
It is one thing to gamble and the company goes under. Its another thing if the company survives, the employees and union are retained, and ownership swaps hands with the help of the government.
It appears that a deal is going on at the detriment of the bondholders and shareholders. "Crap on the investors while guaranteeing the WELFARE of the blue collar middle class."
What a great way to encourage investors to put their fund in the market
Sea Urchin 7:01PM (5/04/2009)
Rick read this line "Other senior creditors led by Oppenheimer Funds and Stairway Capital are not willing to walk away from the $3 billion they're owed without a fight. "-------------------SENIOR, that means that their loan was probably backed, meaning Crysler said, give us money, if we will not pay you an interest one month you can take our property. Guess what?
Look this populism that you are pushing can work wonders on CNBC viewers and NPR listeners but i think most in here are at least aware of contract laws.
Sea Urchin 7:04PM (5/04/2009)
"I'm just tired of those who already have quite a bit, and yet that's not enough. "----WHAT ARE YOU TALKING ABOUT?????????
They gave Chrysler money as a loan, Chrysler refuses to return it, why shouldn't they be able to get their money back? Dude you are not even a communist...at this point.
Sanders 7:37PM (5/04/2009)
Is everyone ingesting a controlled substance as the younger generations say? Sea Urchin you nit, go back and read the post before you explode into one of your usual tirades. The post has nothing to do with the issue. The gentleman is venting over an issue with his employer, mostly. I too have used various forums over the past year to do the same. It's best to give everyone some distance these days. Trust me. I'm sure I have 30-40 years life experience on you.
Tourian 3:20PM (5/05/2009)
Wait. So the guys and girls who run these banks who probably got free money themselves from TARP or the bank bailout or whatever are now pissed because they won't be getting all their money back from Chrysler?
I bet the death threats are coming from people who work for Chrysler who want to see the BK proceedings go as smooth as possible so the company can get back to making money and its these hedge fund peple who are holding up progress.
Ed 6:14PM (5/04/2009)
Has anybody else here ever read 'Taken For A Ride'? It chronicles the drama surround Chrysler's 'merger' with Daimler and the years leading up to it.
It is honestly one of the best books I have ever read. Stranger than fiction, as they say.
I can't help but think how justified a second book in the series is at this point. A lot has happened at Chrysler since the beginning of the decade.
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mikecanada 6:18PM (5/04/2009)
Thanks for mentioning that, I didn't know a book was published on the subject
MemphisNET 6:35PM (5/04/2009)
Excellent book. +1
Runner 6:41PM (5/04/2009)
Hear, hear. That was a bizarre story, this is quite the sequel we're experiencing now!
hans 6:21PM (5/04/2009)
i think the main issue is these creditors are senior secured debt, but are being offered less than the democrat supporting UAW for their non secured debt.
I'm not a big fan of the banking industry / hedge funds etc, but why should the UAW get preferential treatment when they are the lower tier creditors?
Pensions are not secured obligations, so if anything in a liquidation the hedge funds / creditors would get everything before the UAW got a penny. Whether that is more than the chp.11 result is the only real question. I bet the hedge funds roll the dice on chapter 7 and this gets real bad real fast.
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AMcA 9:24PM (5/04/2009)
Precisely correct.
The Obama administration was trying to push secured creditors into accepting next to nothing.
They're going to get a better deal in bankruptcy, and they're entitled to it.