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Politics : Formerly About Advanced Micro Devices
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To: TimF who wrote (482830)5/22/2009 7:19:32 PM
From: tejek  Read Replies (1) of 1574059
 
I am not sure what you think the junior creditors like the unions are getting but everybody in the deal is getting cut......its the nature of BK.

Everyone is taking a loss, but the senior creditors are taking a much larger loss, despite the fact that the senior debt was at a lower interest rate in response to the contractual terms that made it senior to the claims of the junior creditors.

I am not sure you can come to that conclusion. Among other cuts, the union has lost half the funding that Chrysler was supposed to pay on the company health plan. How did you determine that that's better than what is happening to the senior creditors?

The senior debt obligations legally come before things like payments to the pension fund under union contracts. Theoretically they should be entirely paid off before the junior creditors get a penny. In practice the junior creditors usually get something in order to make the deal happen, but they would take a bigger hit than the senior creditors. But now Obama is reversing all of that because he (and/or his appointees) like the unions more than the debt holders.

You're not listening.......the BK judge has the debtor [Chrysler] come up with a plan Then the creditors vote on the plan. Apparently, the BK plan has been approved. End of story.
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