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Politics : Formerly About Advanced Micro Devices
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To: combjelly who wrote (483221)5/27/2009 5:54:35 PM
From: TimF  Read Replies (1) of 1574004
 
Senior creditors get the available cash from the existing company. They have no particular status in the new company.

The new company is a way to grab the assets away from the senior creditors. It could have continued as the same company with the bankruptcy forcing a write down of debt in exchange for equity, but then in addition to the cash the senior creditors would have the majority of the company (and the unions would have a smaller position at best). The senior creditors go along because a number of them are now effectively under the administrations control (at least on this issue) and those who are not where not a big enough block to effectively oppose the deal.
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