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Politics : American Presidential Politics and foreign affairs

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To: DuckTapeSunroof who wrote (35708)	6/2/2009 12:48:23 PM
From: TimF	Read Replies (1) of 71588

The assets 'securing' most of the loans would be next to totally worthless (other then scrap value) if the government did not come in with it's $50B in new investment That's how the government got so much influence over the situation. The point is not that it does have such influence, or (for those who accept the $50bil as a good thing, which is another question) that it should not have influence, the point is that it using its influence in negative ways. In chapter 11s seniority is frequently* reshuffled by the Court (as this one study indicated: 78% of the time it is)* 78% percent of the time its shifted, but that shift can be small. No shift would imply the junior creditors don't get a penny before the senior creditors are fully paid back. I don't object to the existence of any shift, to the idea of the junior creditors getting some small part of their money back, esp. when it results in a quicker and smoother bankruptcy. The problem here is that you don't simply have a small shift, or even a large shift, but a reversal with the (or some of the) junior creditors getting more for each dollar of what the company owes them.

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