Which isn't what is happening.
Then, how do you describe the following:
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Chrysler secured creditor to fight "illegal" plan
Thu May 7, 2009 4:22pm BST
By Tom Hals
NEW YORK (Reuters) - Plans for a quick sale of Chrysler to a new company majority-owned by a union-aligned trust is "patently illegal" and will be fought in bankruptcy court, one of the holders of the automaker's secured debt said on Thursday.
"We don't succumb to pressure and don't agree to unfair and illegal payment schemes," said George J. Schultze, the managing member of Schultze Asset Management. "We're not conflicted by TARP money or active stress tests."
Three funds associated with the asset manager hold the automaker's secured debt and are part of the nine-member Chrysler Non-TARP Lenders group fighting the restructuring proposal. TARP is the U.S. Treasury's $700 billion Troubled Asset Relief Program.
Four large banks that hold most of Chrysler's $6.9 billion secured debt have agreed to accept about 29 cents on the dollar as part of a government-brokered reorganization plan.
Schultze said the banks only agreed to the plan because they had accepted billions of dollars in government capital.
The restructuring centers on selling streamlined operations of Chrysler to a new company, which will be 55 percent owned by a union-aligned healthcare trust. Italian automaker Fiat SpA (FIA.MI: Quote, Profile, Research) will also have a stake in the new company, along with the U.S. Treasury and Canadian government.
The trust is an unsecured creditor and by law has lower priority claims on the company's assets than secured creditors, although under the reorganization plan it will receive more than what has been offered to secured creditors.
"I'm not clear the sale will be completed because it's patently illegal," said Schultze, who is a bankruptcy attorney.
The group of lenders were branded as "speculators" by President Barack Obama, who blamed them for refusing an out-of-court restructuring and seeking taxpayer money.
Schultze would not say why he bought the Chrysler secured debt or what he paid, adding that he did not expect to sell it. "At the right price, yes, but we're not there yet," he said.
"It's an investment and one reason we went into it was because we expected normal laws to be upheld, normal bankruptcy laws that were developed and refined over decades, and we didn't expect a change in the priority scheme to be thrust upon us."
He said upsetting the order of repayment would potentially discourage lending.
"People who make loans to companies in corporate America will think twice about secured loans due to the risk that junior creditors might leap frog them if things don't work out. It puts a cloud on capital markets and the riskiest companies that need capital will no longer be able to get capital."
The Chrysler Non-TARP Lenders were not delaying a restructuring, he said.
"What's holding it up and making it a sticky process is that junior creditors are being paid ahead of senior creditors," he said. "Junior creditors who are politically on the same side as the Obama administration."
(Reporting by Thomas Hals, editing by Dave Zimmerman)
uk.reuters.com |
