Tag Archives: Chrysler bankruptcy

Chrysler, Obama and the law

Deal Book has an excellent post on the legal issue being fought out before the Supreme Court in the Chrysler bankruptcy. At stake: our Constitution’s protection for creditors vs. the political desire to reward labor unions. The author hints that the Court may let the deal proceed while examining the issue at its leisure, since Fiat doesn’t really have any concern here – they’ll get the company either way, either with the union placated or the creditors. This hunch is supported by Fiat’s announcement today that they still want to go through with the deal, regardless of the Supreme Court’s review. I think the Constitution wins this one.

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(Some) Hedge fund managers shrugged

Three hedge funds owed money by Chrysler rejected the government’s effort to force them to accept the Chrysler bailout deal. Obama’s furious.

A person at a hedge-fund firm that owns Chrysler loans, speaking anonymously, told Dow Jones Newswires that the difference between what loanholders would get in bankruptcy and out of bankruptcy wasn’t that much, meaning the non-TARP lenders are making a political statement more than anything.

“Are they taking reputational risk for pennies?” asked the person. “Do the math on the recovery levels. It doesn’t make sense for them to have held out for purely economic value.”

Good for them.

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