These creditors have some balls. Withdrew the reference so the Motion will be heard in District Court, rather than Bankruptcy Court. I don't think the Second Circuit is ready to trash the Absolute Priority Rule. This will just make Fiat back out of the deal meaning that Chrysler, like GM, will be owned by the US Government.

Three of Chrysler’s secured creditors are mounting a fresh attempt to thwart the carmaker’s Chapter 11 reorganisation on the grounds that it violates their legal rights and the US government’s authority under the Troubled asset relief programme.

The three – all Indiana state pension funds – are among a group of 46 creditors that had appeared to back away this month from efforts to derail the process under which a “new” Chrysler would emerge from bankruptcy protection by July 1. The new entity would be owned by a union healthcare trust, the US government and Italy’s Fiat.

Chrysler, with backing from the US Treasury, had offered its secured creditors just under 30 cents on the dollar to settle claims totalling $6.9bn. Four big banks, holding the bulk of the claims, accepted the offer following political pressure from Washington.

However, the Indiana State Teachers’ Retirement Fund said on Wednesday that it had a fiduciary responsibility to its members to continue the fight. The fund stands to lose $4.6m under the current settlement proposal and has teamed up with Richard Mourdock, Indiana state treasurer, to try to recover those losses.

The latest objections could galvanise other lenders to renew their challenge. “I fully support their motion and believe a number of lenders (including us) will ultimately join their group,” said George Schultze of Schultze Asset Management, one of the creditors that had abandoned an earlier legal fight.

In a court filing on Wednesday, the Indiana funds accused the government of adopting a strategy of “the ends justify the means”.

They also said the Treasury “has taken constructive possession of Chrysler and is requiring it to adopt a sale plan in bankruptcy that violates the most fundamental principles of creditor rights – that first-tier secured creditors have absolute priority”.



The Indiana funds say the current plan will strip their collateral into the new company, benefiting more junior creditors. The funds also allege that Tarp funds were meant to be funnelled only to financial institutions.

“Whatever powers the Treasury department may have under Tarp,” the funds said, “it does not have the power to control the entire restructuring of a company to the detriment of the company’s secured creditors and for the benefit of other interest groups so that certain broader policy and political objectives may be achieved.”



A US bankruptcy judge on Wednesday denied their attempt to halt proceedings in bankruptcy court, but a district court needs to rule on the funds’ request for the case to be heard in district court instead.

The group also can oppose the final sale agreement, which under the current timeline must be approved by May 27.

http://www.ft.com/cms/s/0/b3c8beb8-4564-...abdc0.html

I don't see the 30% equity-for-debt swap to be worth much in 10 years. I've always assumed that 10% of nothing is still inevitably nothing.

Won't the district court judge just refer it to the BK judge. That seems pretty common. BK judges just gavel away stock, pensions, assets, contracts, debt, and any and everything else in site.

(05-25-2009 01:36 AM)SumOfAllFears Wrote:  Won't the district court judge just refer it to the BK judge. That seems pretty common. BK judges just gavel away stock, pensions, assets, contracts, debt, and any and everything else in site.

District Court will hear it, after the specific request of the Creditors for the DC to rule on it. This is going up to the Second Circuit and pulling the reference just fast tracks the case.

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I think what Chrysler is trying to do, is stave off Obama from becoming Chrysler's CEO by using these weird, underhanded, and illegal tactics to overthrow and Socialize Chrysler.

I believe that if they can just get a Default back to the Bankruptcy Judge, then the Judge will assign a Court Appointed Overseer to deal with Chrysler's Financial Dealings as well as their Assets and Inventory Protection and distribution.

The way it was going would put Barack 'the TOTUS' Hussein Obama as the #1 Controller/CEO of Chrysler and that is the LAST THING I WOULD WANT if I were Chrysler ......

So heck yeah fight that crap with all your heart and soul before Obama takes your soul.

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(05-25-2009 11:44 AM)Tripster Wrote:  .

I think what Chrysler is trying to do, is stave off Obama from becoming Chrysler's CEO by using these weird, underhanded, and illegal tactics to overthrow and Socialize Chrysler.

I believe that if they can just get a Default back to the Bankruptcy Judge, then the Judge will assign a Court Appointed Overseer to deal with Chrysler's Financial Dealings as well as their Assets and Inventory Protection and distribution.

The way it was going would put Barack 'the TOTUS' Hussein Obama as the #1 Controller/CEO of Chrysler and that is the LAST THING I WOULD WANT if I were Chrysler ......

So heck yeah fight that crap with all your heart and soul before Obama takes your soul.

.

Years ago I used to Clerk for a Bankruptcy Judge. What these secured creditors are trying to do is trigger a conversion to Chapter 7 and liquidation under a Chapter 7 Trustee.

They WILL get more under a Chapter 7 Liquidation than under the proposed Plan of Reorganization.

Fiat will walk away if the Obama Plan isn't approved. For them the deal only makes sense if the secured creditors are squeezed and they get the promised US Government backed funding. That won't happen if the Obama Plan isn't approved.

And the secured creditors have a hell of a great argument. The Obama Plan violates the "Absolute Priority Rule."

(05-25-2009 11:54 AM)WMD Owl Wrote:  Years ago I used to Clerk for a Bankruptcy Judge. What these secured creditors are trying to do is trigger a conversion to Chapter 7 and liquidation under a Chapter 7 Trustee.

They WILL get more under a Chapter 7 Liquidation than under the proposed Plan of Reorganization.

Fiat will walk away if the Obama Plan isn't approved. For them the deal only makes sense if the secured creditors are squeezed and they get the promised US Government backed funding. That won't happen if the Obama Plan isn't approved.

And the secured creditors have a hell of a great argument. The Obama Plan violates the "Absolute Priority Rule."

So what you are basically saying, is that unless Chrysler actually comes up with all the money it needs from within its own house to bail its self out, they are totally screwed no matter which way they go ?

Man that is pretty sad for them and us .... it appears that this situation may set some sort of On The Edge Precedent for how the Government can wreck free market companies no matter what they try to do to protect them selves.

And we know that short of a complete miracle, Chrysler is not going to be able to bail them selves out.

I guess we are seeing a Historical Moment - - but sometimes it is not so fun to be on the "Side Lines of History" and helplessly witness it happening.

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I think what he means, is that the creditors have Priority to recover their money before shareholders and the (USGov). It would be better to see the company's assets Dissolution or dissolved in BK, instead of letting Fiat have Priority over the creditors, and ObamaPromise to back it all by the US taxpayer to save jobs which Fiat might cut tomorrow, anyway.

(05-25-2009 11:17 PM)SumOfAllFears Wrote:  I think what he means, is that the creditors have Priority to recover their money before shareholders and the (USGov). It would be better to see the company's assets Dissolution or dissolved in BK, instead of letting Fiat have Priority over the creditors, and ObamaPromise to back it all by the US taxpayer to save jobs which Fiat might cut tomorrow, anyway.

Secured creditors get paid first- to the value of their collateral, or they get back their collateral. The Obama plan put the secured creditors 2nd or 3rd-- behind the UAW / the Government with Fiat getting the soft Chrysler assets-- dealers and distribution rights.

The only hard Chrysler assets that have any significant value are Jeep and Dodge Trucks. Those can be liquidated to pay off the secured creditors.

More fallout from the Socialistic ObamaMessiah Government. I have also heard a rumor that there was a criteria for closing of dealerships. A cursory review that many of the Chrysler dealers on the closing list were heavy Republican donors. How can this happen in America?

Quote:My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.
We currently employ 50+ people and before the economic slowdown we employed over2070 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.
I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THI S IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.
HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?
I beseech your help, and look forward to your reply. Thank you.
Sincerely,
George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

Assuming the creditors appear likely to win their challenge, Obama then has the option of seeing his intervention end in complete failure or spending some Billion$ more. Ego mandates would predict that the government will shell out more money to see those debtors satisfied. Given that that stands under $20 Billion, I'd predict that the US will pour that much money back into Chrysler. The question would then be, how will that affect other bailouts in progress? Will GM creditors file similar challenges? The only real leverage that Obama may have is to delay the process as long as possible, aside from throwing another tantrum from his bully pulpit. I can't see him taking retribution steps against Indiana teachers.

(05-26-2009 10:47 AM)SumOfAllFears Wrote:  More fallout from the Socialistic ObamaMessiah Government. I have also heard a rumor that there was a criteria for closing of dealerships. A cursory review that many of the Chrysler dealers on the closing list were heavy Republican donors. How can this happen in America?

My initial swag would be that many of the dealers on the list of those not closed are heavy Republican donors.

(05-25-2009 11:44 AM)Tripster Wrote:  .

I think what Chrysler is trying to do, is stave off Obama from becoming Chrysler's CEO by using these weird, underhanded, and illegal tactics to overthrow and Socialize Chrysler.

I believe that if they can just get a Default back to the Bankruptcy Judge, then the Judge will assign a Court Appointed Overseer to deal with Chrysler's Financial Dealings as well as their Assets and Inventory Protection and distribution.

The way it was going would put Barack 'the TOTUS' Hussein Obama as the #1 Controller/CEO of Chrysler and that is the LAST THING I WOULD WANT if I were Chrysler ......

So heck yeah fight that crap with all your heart and soul before Obama takes your soul.

.

Haven't you run out of tin foil yet?

(05-26-2009 11:45 AM)I45owl Wrote:  

(05-26-2009 10:47 AM)SumOfAllFears Wrote:  More fallout from the Socialistic ObamaMessiah Government. I have also heard a rumor that there was a criteria for closing of dealerships. A cursory review that many of the Chrysler dealers on the closing list were heavy Republican donors. How can this happen in America?

My initial swag would be that many of the dealers on the list of those not closed are heavy Republican donors.

Really all you ever have is your Super Wild Ass Guess.

(05-26-2009 12:10 PM)RobertN Wrote:  Haven't you run out of tin foil yet?

YES !!!!!!

They told me some Idiot Liberal Obamagog Slobbering Freak named RobertN came in and bought out the entire inventory along with all the Kool-Aid.

KMA young blood ...

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