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TradIsGood
Chalkless climber
the Gunks end of the country
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Topic Author's Original Post - May 4, 2009 - 09:08pm PT
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The non-Tarp banks are opposing the sale to FIAT. They say that the proposed settlement is going to pay creditors with junior claims more than the senior creditors.
Their position basically is that the debt settlement was rammed down the TARP bank's throats, who weren't in a position to stand up for their rights. Remember Hank Paulson and Bernanke forcing Bank of America to go through with the Merrill merger by threatening to fire the CEO and remove the board?
The hearing on the sale was postponed until tomorrow AND the objecting banks were ordered to identify themselves.
Now why do you think they wouldn't already have identified themselves?
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jstan
climber
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I agree with the banks and hedge funds that we should not be in their business. The Federal government should respond by taking back all federal monies so far advanced and if the corporations can not respond they should immediately be put in receivership.
I would suggest federal control for the public benefit should be expressed as follows. When a court has found that an entity has violated law their right to carry out business should be revoked. No more of these fines that amount to a percent or two of their ill-gotten gains. Furthermore the concept of limited liability has to be amended. Where the law has been violated then this protection of the law also must be removed.
Unfortunately those burdened by responsibility don't always have the option to dyno for the real solution.
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Sir loin of leisure...
Trad climber
X
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I can't think of any cars they make that I would buy...DO they make jeeps? no...
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Pennsylenvy
Big Wall climber
The climbing Capital of the Galaxy
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Republican fetish = Obama fails
Edit: as much as I thought Georgie was a complete putz, at least I didn't want my country to fail(or GWB for that matter).
Democrats smart(want country to succeed) republicans dumb (deal with our politics like an after school fight)
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TradIsGood
Chalkless climber
the Gunks end of the country
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Topic Author's Reply - May 4, 2009 - 10:46pm PT
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Right, fattie.
Some of the lenders.... The non-bank lenders who can't be strong-armed by the US Treasury, OCC, or FDIC. In other words, the lenders that are not regulated have identified themselves.
It used to be: Hi, I'm from the government and I'm here to help you.
Now it is: Hi, I'm from the government, and if you do what I tell you, I'll let you keep your job, but don't think for a minute that it means you are in charge!
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stevep
Boulder climber
Salt Lake, UT
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Fattrad,
Oppenheimer was a recent lender to Chrysler?
Lending after you're dead is an even more impressive feat than sucessfully running the Manhattan Project. Does our country have no sense of patriotism that they would try to screw this great, dead man out of his loaned money?
Or is this another plot by the also dead Edward Teller to discredit Oppenheimer?
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Reilly
Mountain climber
Monrovia, CA
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Fattie,
Shouldn't you thank the prez? Isn't he basically guaranteeing your investment? C'mon, give him a little luv.
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bachar
Gym climber
Mammoth Lakes, CA
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Reilly
Mountain climber
Monrovia, CA
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I'm with you Fattie. Do you think the unions will actually come to their collective senses and act responsibly?
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JEleazarian
Trad climber
Fresno CA
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Secured debt insturments are usually underpriced in reorganization cases. Many assume that all classes of claims (bankruptcy term for creditors) and interests (bankruptcy term for equity owners) share alike. They don't. The Bankruptcy Code adopts the "Absolute Priority Rule" (See 11 U.S.C. Section 1129(b))if any class fails to accept a Chapter 11 plan. That says, in essence, that secured claims get paid the full value of their collateral, or else are paid in full, and senior classes must be paid in full before junior classes receive anything.
Secured debentures are almost always (absent some bizarre subordination) senior to unsecured debt, so they get paid before anyone else gets anything.
Lest you think congress can wave its magic wand and change that, the Supreme Court in Louisville Joint Stock Bank v. Radford held that secured creditors have Fifth Amendment rights. Forcing them to give up something to unsecured creditors would amount to a taking requiring compensation.
Have fun with your investing.
John
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TradIsGood
Chalkless climber
the Gunks end of the country
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Topic Author's Reply - May 6, 2009 - 07:08am PT
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John, your argument sounded convincing.
Here is another argument. The Manhattan court is competing with all of the other district courts for this "business". By siding with the company against the creditors, they can induce GM to file there as well.
Judge Arthur Gonzalez ruled in favor of Chrysler yesterday.
So do you have a call on whether the decision will be appealed, whether the lawyers for Chrysler will cave, and if appealed how the appeal will go?
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JEleazarian
Trad climber
Fresno CA
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I've certainly seen lots of forum shopping in bankruptcy cases, but the main criterion is the convenience of counsel. Incidentally, all counsel paid from the bankruptcy estate (meaning counsel for the debtor and any official committees such as unsecured creditors or equity security holders) must have the bankruptcy court approve their fees. Counsel find judges objecting to their hourly rates extremely inconvenient. The Southern District of New York and the District of Delaware don't blanche at New York hourly rates, so these are always "convenient" venues. I think that was the only reason Chrysler chose the S.D.N.Y. It could not know which judge it would draw until it filed.
Appealing sales orders can be tricky. Section 363(m) of the Bankruptcy Code says that an order approving a sale to a good faith purchaser cannot be effectively appealed unless the appealing party obtains a stay pending appeal. If the sale closes before a court issues a stay, the appeal becomes moot.
Ironically, perhaps, the leading case about this sort of transaction arose in this court and circuit. It involved the Chapter 11 of Lionel Corporation, and the Second Circuit reversed two lower courts and said you cannot approve a sale that, in effect, determines the plan, without special circumstances and significant disclosure. I don't know all the facts of the Fiat deal, but it will certainly require compliance with Lionel to be approved. Still, most of the Lionel findings would be findings of fact, which an appellate court cannot set aside unless they are clearly erroneous.
I also would not read too much into the judge's initial rulings. These came on "first day orders" that are usually granted because failing to do so almost always dooms the case to Chapter 7.
Having said all this by way of background, I think the court will probably approve the Fiat deal, although it may tinker around the edges. The non-TARP group certainly has the muscle to obtain a stay pending appeal, and that threat may lead to a "consensual resolution" that is, in fact, consensual.
Sorry to say so little in so much.
John
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TradIsGood
Chalkless climber
the Gunks end of the country
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Topic Author's Reply - May 6, 2009 - 12:41pm PT
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John, I was not suggesting that Chrysler jurisdiction shopped, but rather that the court in making this finding was making itself attractive to other filings.
This is more of an empire building activity on its part.
The restriction, as I understand it (which is not too much), is that a 363 sale has to be a real sale, not just a sham behind which a reorganization is accomplished to the detriment of creditors.
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JEleazarian
Trad climber
Fresno CA
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skip,
Needless to say, I know both the judge (now retired) and Hilton Ryder. I've never heard of such a thing either, but I know it happens.
John
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JEleazarian
Trad climber
Fresno CA
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TIG,
I can't comment on the empire building, except to say that most Bankruptcy Judges I've known personally (which is about 20) try to avoid having more cases, although I can think of one or two that love the limelight and would welcome a mega case or two.
Generally, you need to show that a sale out of the ordinary course of business is both an appropriate exercise of sound business judgment, and one (that, as in Lionel, shut out equity from any plan) that cannot wait. As luck would have it, the Lionel sale was one that got better with time. Lionel sold a subsidiary (Dale Electric). The initial sale would have left enough only to pay unsecureds in part, and equity not at all. By disapproving that sale, the Circuit allowed the debtor to sell to a much highter bidder. Creditors got 100 cents on the dollar, and equity got something as well.
John
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clustiere
Trad climber
berkeley ca
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Hey great info, and what does this have to do with climbing. There are political rant forums. One might go to a news site for news....
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TradIsGood
Chalkless climber
the Gunks end of the country
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Topic Author's Reply - May 6, 2009 - 11:51pm PT
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clustiere, seems like your comprehension of the thread is pretty good, but not so good on the forum.
It is the "Supertopo Climber's Forum", not the "Supertopo Climbing Forum".
The forum relaxed a bit for a while and tolerated - well some did anyway - LEB.
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