This is what I'm reading. Govt. thought Chrysler and Fiat could work out a merger (Fiat acquires Chrysler) by 4/30, but it didn't happen. Chrysler bond holders are holding out for more. Obama is trying to demonize the bond holders for not going along. As always, the devil is in the details. There are classes of bondholders, Sr. secured and Jr. unsecured. Govt. wants the Sr. secured bondholders to take 50 cents on the dollar and give money to the unsecured debtors (which in this case includes the union). Traditional bankruptcy says the sr. secured holders get paid first and the unsecured holders split what's left. Sr. secured said they were willing to take a small haircut to get the deal done, but the govt. wanted them to give up too much. They found out in analyzing the deal that the govt. wanted to give the unsecured creditors as much as the sr. secured holders. This has never flown that way in a bankruptcy court, hence they want to take their chances in front of a trained bankruptcy judge. The hedge fund managers who own the sr. secured debt say they represent their shareholders, who pay them to make money, not give their rightful claim away to the unsecured debtors, including the union. As an investor, I see the hedge fund managers point. You can't make an investment on sr. secured debt and take a lower interest rate (you are buying safety), and then if the outfit goes bust, give away the security that you purchased. That's changing the rules in the middle of the game. It's kind of early in this one, not too much out, except that somebody (maybe some union muscle) is calling the hedge fund managers and threatening to kill them if they don't take the govt. offer. This is going to be interesting (not in a good way). Edited: Some of the banks taking TARP money are among the secured creditors, and they "agreed" to the govt. terms (hmmm). The hedge funds holding secured debt and objecting are smaller and they never took any TARP money, so the govt. has little leverage over them, except the bully pulpit, or "an IRS investigation" (no rumor of that, just being sarchastic).
The government will come in and "secure" the unsecured debt because of the unions and make another $hitty investment.
You just summed it up. Obama and his ilk were bought and paid for by the unions. They have no interest in doing whats right or what's fair, they only care about playing class warfare politics. Just like when they announced the bankruptcy, they went out of their way to demonize the bond holders. I have no doubt about the truthfulness regarding the attempted blackmailing by the Obama administration about threatening to use the white house press to destroy the Sr. secured bondholders. They did it.
If I want to know what is going on with American corporations in the future, I will skip the corporate letters and just wait for the president's state of the union address.
Judge OKs Chrysler financing over lenders' protest - Yahoo! Finance I can't believe the bond dissidents want a liquidation, sounds like they are negotiating for more than .29 on a dollar.
Gettelfinger is in la la land. How is the UAW taking any risk when their only choices were concessions or no jobs at all? Their so called concessions didnt amount to didly $hit and did nothing to address the huge albatross hanging around every auto makers neck, funding retirement and retirement health care. What the hell is Gettelfinger talking about here regarding retired workers? What pain are they feeling? The government has guaranteed their retirement and the Pension Benefit Guaranty Corporation will end up getting a bail out too. Chrysler and GM have more retired workers than active workers. A blind man can see they have fixed costs attached to their products that will cause certain failure in this economy. There is no need to continue the charade. The US auto makers are done, they milked that cow for all it was worth and its over. Let them die and be done with it. There are plenty of other car manufacturers and other US car plants employing US workers. Sure its sad but there is nothing that can be done to save them. I found this quote telling:
This country is heading to hell in a handbasket far faster that I ever dreamed possible. So much wrong and no one seems to give a ****. Take from those that DO and give to those that DO NOT. Abuse power and reward those that are responsible for the mess and punish those that have legal rights.
But Obama can still run around and say he didn't bailout Chrysler and John Q Public will believe him. It'd be funny if it weren't so sad.