Sale to Fiat in court

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http://www.washingtonpost.com/wp-dyn/content/article/2009/06/07/AR2009060702548.html
 Quote:
Three Indiana state pension and construction funds late Saturday filed documents requesting that the sale be delayed so that the Supreme Court can hear their appeal. Two lower courts have already rejected the lenders' objections. On Friday, the U.S. Court of Appeals for the 2nd Circuit ruled the sale could go forward after 4 p.m. today or earlier if the Supreme Court declines to take up the case. The Indiana funds' emergency application was made, under Supreme Court procedures, to Justice Ruth Bader Ginsburg, who oversees the 2nd circuit appeals court. Ginsburg could rule on her own or refer the matter to the high court. The Indiana funds contend that the sale of most of Chrysler's assets to a new company -- to be jointly owned by Fiat, the United Auto Workers union and the U.S. and Canadian governments -- breaches numerous laws. For one, they argue, the process tramples on the funds' rights as senior lenders to Chrysler because they would recover less than junior lenders. The Indiana funds hold about $42 million of the $6.9 billion in secured loans. Under the agreement hammered out by the Obama administration with most of the first-lien lenders, the group would recover about $2 billion, or 29 cents on the dollar. The funds also contend that the quick bankruptcy proceedings pursued by Chrysler and the Obama administration -- a federal bankruptcy judge approved the sale 32 days after the automaker filed for one of the largest bankruptcies in U.S. history -- did not comply with bankruptcy law. The Indiana funds are also arguing that the Treasury illegally used money from the federal Troubled Assets Relief Program, meant for financial institutions, to prop up Chrysler. "Absent a stay, the Court will be deprived of the opportunity to decide critical, nationally significant legal issues relating to management of the economy by the United States Government," the Indiana funds wrote in their Supreme Court application.
 

pbm

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The Indiana pension funds have a very valid argument but with the same party controlling both branches of goverment and Ginsburgs history I think they are pizzing into the wind.....
 
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What in god's name were pensions funds investing in junk bonds for?I would string up my pension manager by his n*ts if he did that. This was a gamble pure and simple,these bonds sell for pennies on the dollar and are usally money down the drain but if they pay off they make big money.This law suit is just a way to make a bit more.Taxpayer will untimately pay.
 
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The one-page order by Supreme Court Justice Ruth Bader Ginsburg stopped the sale “pending further order” by her or the full court, based on an appeal by three Indiana pension funds holding $45 million in Chrysler’s secured loans. Ginsburg gave no time frame for when those next orders might arrive. http://www.freep.com/article/20090608/BU...er+sale+to+Fiat So far so good. Maybe we do have more than a monarchy still. The fun's just starting too. The GM bankruptcy was another "pre-packaged" deal that would now seem to be in question given it's similar nature. And all that TARP money that belongs to the taxpayers but gets doled out in secret by a handful of unelected bureaucrats with no reporting or oversight? I wouldn't bet that process can pass a constitutional challenge either...
 
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Tempest

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This will be very interesting. We'll have to see if the Supreme's don't punt the way the appeals court did. If they uphold the ruling, it sets a precedent that the gov. can abrogate contracts and the law at will.
 
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 Originally Posted By: astraelraen
Chrysler bonds weren't always junk bonds
Any fund manager gets OUT long before they are junk, thats their job
 
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Can someone point me to where this whole issue is mentioned in the Constitution of the United States? As deep as the government is involved in all of this, it must be covered somewhere in the Constitution.
 
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I think it's where it says that any power not granted in this document is reserved to the states. Not that that's been enforced for the last 75 years or so. Besides, the Constitution was written by a bunch of old white guys, not blessed with the judgement of a Latino woman. No wonder it's pretty much ignored by a couple of branches of government.
 
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It's a public company, being controlled by the Executive Branch (EB). Nothing private about it whatsoever. The bondholders aren't being consulted about what they want, they are just offered what the EB wants to shove down their throat. The government ownership and ability to dictate terms is (in the humble opinion of this non-attorney layman) completely illegal, as is the restructuring of GM (also without the bondholders consent). I've even heard from two sources (I haven't researched this yet, so take it with a grain of salt) that the overwhelming majority of dealerships shut down have Republican owners, to the benefit of Democratic campaign contributers, by order of EB wonks. If that doesn't scare you, I don't know what will.
 
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Actually, it is a PRIVATE company. There is no public stock for Chrysler at this time. It's been private since Daimler sold to Cerebus. So that detail is true. However, there is a legitimate legal question regarding bond holders and their standing in a bankruptcy proceeding.
 
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Oops, got caught in a time warp here. I was wrong, and you are correct, about Chrysler having gone private. With the government ownership though, I'm not sure that is the correct term now that "we" all have a stake in the company. The EB apparently believes the bondholders lost all rights when the company sold their soul to the devil by accepting Government money in the last administration. Apparently, the Supremes think the matter deserves more investigation. I expect a bigger stink when the GM matter comes up. If the EB gets away with this, I expect a lot of companies to have problems in the future raising money by selling bonds.
 
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 Originally Posted By: ArrestMeRedZ
Oops, got caught in a time warp here. I was wrong, and you are correct, about Chrysler having gone private. With the government ownership though, I'm not sure that is the correct term now that "we" all have a stake in the company. The EB apparently believes the bondholders lost all rights when the company sold their soul to the devil by accepting Government money in the last administration. Apparently, the Supremes think the matter deserves more investigation. I expect a bigger stink when the GM matter comes up. If the EB gets away with this, I expect a lot of companies to have problems in the future raising money by selling bonds.
Glad to see at least a couple people here understand what is going on. Too bad 90% of the people in this country have no clue.
 
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There's a lot going on behind the scenes. A good write up at RedState, search for Dealergate #7. It's a fairly lengthy article that dives into what's going on. Well today is the "last" day to buy a Chrysler from the affected dealers, who is going out to buy one...to see if you can grab a great deal?
 

PT1

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 Originally Posted By: hone eagle
What in god's name were pensions funds investing in junk bonds for?I would string up my pension manager by his n*ts if he did that. This was a gamble pure and simple,these bonds sell for pennies on the dollar and are usally money down the drain but if they pay off they make big money.This law suit is just a way to make a bit more.Taxpayer will untimately pay.
because secured bondholders by law are first in line for repayment in bankruptcy proceedings. NOT when the President and unions decide differently.
 

PT1

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 Originally Posted By: ToyotaNSaturn
I don't get it. What does the US Supreme court have to do with the sale of a private (allegedly) company?
The bondholders of any US corporation by law are first in line for repayment of ALL of thier money (not 10%) by law. The Obama led restructuring is a violation of the 10th amendment.
 
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 Originally Posted By: PT1
 Originally Posted By: ToyotaNSaturn
I don't get it. What does the US Supreme court have to do with the sale of a private (allegedly) company?
The bondholders of any US corporation by law are first in line for repayment of ALL of thier money (not 10%) by law. The Obama led restructuring is a violation of the 10th amendment.
Couldn't agree more! I see future trouble for companies trying to raise capital by issuing secured bonds if this is allowed to happen.
 
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