Well it's not $.15 either because they go paid $.30 so let's operate under the assumption that no one knows what the value is or what the liquidation of Chrysler would pay. The obvious solution you overlook is senior creditors uninfluenced by government officials who push the company to bankruptcy and take $.30 on the dollar going in and ownership in new Chrysler. The UAW can then decide if they want to continue working or not. If they say no, you liquidate, but i would imagine when being faced with no jobs, they go ahead and say, "yeah, we'll work". Sucks for the UAW, really does, but it also sucks for these people who lost money in their 401k's. The truth is someone is going to lose money here it's just a matter of sorting out everyone's cards. Instead of paying off the winner, they split up the pot. Certain people got in line and played by the rules and others were put in front of them by the president. The overriding problem is that the Union workers have a face. It's tangible, we can see it. The hedge funds are evil. What people still fail to see is that they represent you and me and our retirement accounts. My IRA is widely invested and it's very possible that I lost money on this. With fund of funds and other similar products these days, it's all intertwined.
You are not dealing with reality. You are still believing that you have to pay out to the secured creditors 100% before anyone else, and I have cited circuit court ruling and other expert statements, that this is NOT the case, make that "regularly" not the case. There is a court bias to saving a corporation and all those jobs if it is possible. http://www.bloomberg.com/apps/news?pid=20601087&sid=aowmZkX0TzEE&refer=home So, who you going to believe here, the dissidents attorney, who is clearly biased and only representing his clients side with this specific statement, or a recognized expert who is making his statement as an unbiased (uninvolved) bystander? That answer is easy, you believe the unbiased party first.
It doesn't matter, we're never going to agree but the point is, you have to have a cram down as your article quoted which takes 2/3 of the lenders. Without Obama's push on the TARP guys, they don't have it, period. If they don't have the two thirds, then senior creditors get paid first. The point is not that they are doing something that hasn't been done before, the point is, they are doing it this way because the presdient made them. I would imagine when this cram down is typically enacted, it's because there's some opportunity to make more money on the backside. I highly doubt there are typically cram downs when lenders are taking less debt just so they can give more debt to the junior debtholders.
This is not a typical bankruptcy, so its not a typical cramdown. Read: Why Chrysler’s Bondholders Should Stop Whining - DealBook Blog - NYTimes.com They're in bankruptcy now. I understand that in negotiations, at one time the govt. offered the secureds an extra 250 mil. to do the deal without bankruptcy, but it is not there in the bankruptcy deal, so they have lost some money. That's good, it will perk up the ears of the GM creditors for the next game of chicken.
We are never going to agree on all this but since FIAT wants Chrysler's operation why didnt they just stand back and buy all the assets out of liquidation in a package deal? They can re-brand the cars and dump the UAW with their extravagant retirement benefits. I am willing to bet almost all the UAW workers would leave the UAW if they had jobs at a re-branded Chrysler. Current UAW members are getting screwed by their retired brethren. I believe they would all jump at the opportunity to keep their jobs and with 55% of the cost of each vehicle going to retiree's they would probably get a raise while the new owner could instantly become FAR MORE competitive! Of course this scenario could never play out because of Obama's commitment to the union but it would make a much stronger new company while absorbing workers and keeping jobs the union falsely claims they are trying to protect. The UAW is all about benefits for retiree's and every contract they sign proves it. They claim concessions but they never concede the ridiculous fixed costs of retiree benefits. Its all about current workers making the sacrifice. A new Chrysler without the UAW would be a win-win for the economy, the company and the workers.
Yes, why don't they? Chrysler CEO said he has shopped the co. to every potential buyer in the world for the last two years, no takers. The answer to your question is in post #52 on page 4, go look what Fiat is putting up for their 20%. Engine technology. That's it. They don't want to put out any cash, just like everyone else.
Why dont they? Easy, the UAW. The company is garbage with the UAW in the picture. The CEO tried to shop the company to everyone and the only interested buyer was the Government and UAW. That speaks volumes in itself.
Well Fiat, which would not buy in earlier, will merge now, they have been satisfied with the UAW terms, and there is a deal now. So, let's do the deal.
I wonder what Fiat is really thinking about, now that it looks like they are taking UAW's terms. The only thing of value they are really getting out of this is access to chryslers US dealers (which they want to use to sell their moderately successful brands of fiat, alfa, and lancia) and maybe the jeep trademark. The rest is worthless. Hate to break it to you ram owners, but it's been an also-ran in a crowded market for years. Even the Challenger, while being awesome, is too expensive at it's baseprice compared to the ~20K base mustangs and camaros are going for. It wont be cost effective for them to make fiats over here rather than ship from europe, so what happens when they decide that making the American brands aren't worth it anymore and cancel the lines? Not being US based means they will have no qualms about tossing the UAW aside. Not that that isnt the right move.
