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Politics : View from the Center and Left
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To: KyrosL who wrote (111804)5/24/2009 12:41:44 PM
From: Travis_Bickle  Read Replies (3) of 541743
 
I don't have a dog in the Chrysler fight, but I do have some GM bonds at an average cost of around 7 cents on the dollar.

So say I spent $700 on GM debt ... the moment they default on any debt (which will happen on June 1, 2009), they owe me $10,000 plus accrued interest ... what I paid for the debt makes no difference whatsoever. GM owes me $10k plus interest.

"The Government decided that its Chrysler money will be largely used to benefit the workers."

Again I am translating this to GM ... but to the extent that the government extended credit to GM pre-bankruptcy filing, the government is in exactly the same boat as I am (that is they are "pari passu"). We are both pre-bankruptcy unsecured creditors, and the government has no more say than I do in how GM's assets are distributed or who they will benefit.

It is a totally different story with post-filing lending ... someone who provides DIP (debtor in possession) financing gets paid first; if the DIP financier decides to make a donation to the UAW when it gets paid off the top, then I have absolutely no say in that decision.

We are, supposedly, a nation of laws. And those laws say that GM's bankrupt corpse owes me $10k plus accrued interest, and they say that the government has no more ability to dictate how the bankruptcy estate's assets are distributed than do I.

The government can do whatever it chooses with its DIP financing, but with respect to loans made prior to the chapter 11 filing it is SOL (shit out of luck).
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