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To: TimF who wrote (35519)	5/13/2009 9:54:44 AM
From: DuckTapeSunroof	Read Replies (2) \| Respond to of 71588

That is how the federal bankruptcy code is written. That language has been unchanged for many years. (So, nothing 'changed' with this particular episode.) ANY party to the bankruptcy filing can propose any damn plan for reorganization that it wants to! :-) (But --- since this is a chapter 11 filing, and unless the Judge decides that chapter 11 reorganization is not possible/viable as an option and rejects all the plans --- then LEGAL PRIORITY is given to reorganization plans which are aimed at achieving the desired goal of the Court: shedding enough debts and restructuring the business sufficiently so that a VIABLE NEW BUSINESS rolls out the other side of the bankruptcy action.) That (crafting a viable business that can stand on it's own two feet) is the PRIMARY GOAL of the Court. While paying off creditors is only a secondary legal goal. And --- since the goal is to create a revitalized business, and that requires a whole lot of new cash --- the Court gives preference to any plan for reorganization which "puts it's bucks where it's mouth is"... which comes to the table with Billions in fresh cash to help the company survive long enough to be restructured. (So that is why the Court is showing deference to the federal government's proposed plan of reorganization --- because Uncle Sammy is not only the largest creditor, but also the ONLY participant in the action who is willing to inject Billions in fresh cash, willing to assume the legal role of "debtor-in-possession". Any of the other creditors could have easily taken the lead if they had wanted it badly enough... but none of them wanted to put any money into reorganizing Chrysler. (This is a case where - legally - "Money talks and BS walks". :-)

To: TimF who wrote (35519)	5/13/2009 12:18:39 PM
From: DuckTapeSunroof	Respond to of 71588

A Note on GM and CDS "...a majority can never bind a minority in these situations <to trigger Credit Default Swap payouts>. That's what bankruptcy is for." posted by Stephen Lubben Credit Slips - (A blog on all things about credit and bankruptcy. We are seven academics who will use this space to do what we like to do when we get together--discussing and debating what does happen and what should happen when consumers and businesses borrow money.) creditslips.org It is CDS day on the blog. Both the comments to my prior post and a recent post by Felix Salmon raise the issue of why GM's attempts at an out of court restructuring don't constitute a "restructuring" credit event under the ISDA credit default swap definitions. I wanted to expand on the quick answer I gave in the comments. First, workouts could constitute restructurings, but my understanding is that many North American CDS contracts do not contain "restructuring" triggers, because such a trigger requires an affirmative "opt in" under the ISDA settlement matrix (essentially a spreadsheet of default CDS terms). Second, a restructuring only occurs when "agreed between the Reference Entity . . . and a sufficient number of holders of such Obligation to bind all holders of the Obligation." 2003 ISDA Credit Derivatives Definitions § 4.7 (emphasis mine). Under the Trust Indenture Act an exchange offer would require 100% consent to constitute a restructuring as so defined -- because a majority can never bind a minority in these situations. That's what bankruptcy is for. May 12, 2009 at 3:26 PM in Corporate Bankruptcy