Union to ask bankruptcy court to honor Chrysler deals

[Omaha Steve]

Source: AFP

CHICAGO (AFP) — The United Auto Workers union said Thursday it has the backing of the US government, Chrysler and Fiat to ask a bankruptcy court to honor its labor agreements with the struggling automaker.

"Chrysler, the US Treasury Department and Fiat all remain in full support of these UAW agreements and will join in urging the bankruptcy court to give them immediate approval," the union said in a statement.

Chrysler workers on Wednesday ratified a deal which would significantly decrease labor costs and place limits on the right to strike during disputes.

But the automaker, which has required billions in emergency loans from the US Treasury, was forced into bankruptcy protection Thursday after creditors failed to reach a debt restructuring deal ahead of a government deadline.



Read more: http://www.google.com/hostednews/afp/article/ALeqM5h55IkS8BQ7DAPBIogKuUYZIZW8og

[w4rma]

1. The banks, that we've been bailing out, did this. (nt)

[WriteDown]

2. Not really...

Do you think everything was going well at Chrysler up until this point?

[w4rma]

11. Obama Criticizes Chrysler Lenders, Hedge Funds That ‘Held Out’

By Julianna Goldman

April 30 (Bloomberg) -- President Barack Obama criticized Chrysler LLC lenders including hedge funds and other financial institutions that turned down administration loan-reduction proposals, forcing the automaker into bankruptcy.

“I don’t stand with those who held out when everyone else is making sacrifices,” Obama said today in Washington where he announced that Chrysler would proceed with a Chapter 11 bankruptcy filing to reorganize into a more viable carmaker in a partnership with Italy’s Fiat SpA.

Obama said that while many of the stakeholders worked constructively, others did not. “In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout,” he said.

“They were hoping that everybody else would make sacrifices and they would have to make none,” Obama said. “Some demanded twice the return that other lenders were getting.”

A dissident group of 20 investment firms and other lenders turned down administration loan reduction proposals, leading to a breakdown in talks last night. The firms include OppenheimerFunds Inc., Perella Weinberg Capital Management LP and Stairway Capital Advisors, a person representing the group said, asking not to be identified. The companies were part of a steering group that led Chrysler restructuring negotiations with the Treasury Department.

Dan Arbess, a spokesman for New York-based Perella, didn’t return calls for comment. Jack Brown, a spokesman for New York- based Oppenheimer, declined to comment. Stairway spokesman John Rijo said the Uniondale, New York-based fund would be issuing a statement later today.

Counteroffer

The group made a counteroffer of $2.5 billion late yesterday, said a representative of one of the funds, who asked not to be identified because the talks were confidential.

In bankruptcy, the majority of the lenders who approved the $2.25 billion plan could force the minority to accept a payout similar to the rejected deal. The dissidents plan to object to the company bankruptcy plan to put its best assets into a new entity, said a person familiar with their thinking.

Obama’s language echoed a senior administration official who earlier today rejected complaints from the lenders that they weren’t treated fairly. Every lender had the opportunity to participate and every lender was communicated with directly, said the official, who spoke on the condition of anonymity.

Even if they object to the bankruptcy plan in court, the official was confident that the judge wouldn’t override the support of the other lenders, who hold 70 percent of the loan.

‘Vultures’

The objections from the group of lenders also drew criticism from Michigan lawmakers, including Democratic Representatives John Dingell and Sander Levin.

“The rogue hedge funds that refused to agree to a fair offer to exchange debt for cash from the U.S. Treasury, firms I label as the ‘vultures,’ will now be dealt with accordingly in court,” Dingell said.

“It is outrageous that a handful of hedge funds and other creditors have refused to join all the other stakeholders in participating in the restructuring necessary to pave the way for a Chrysler-Fiat alliance,” said Levin.
http://www.bloomberg.com/apps/news?pid=20601087&sid=al.LvMtoEItY&refer=home

I repeat myself, for emphasis: The banks, that we've been bailing out, did this.

[shaniqua6392]

3. Three hedge funds were the hold outs...

not the banks. Actually, the banks are credited with reducing the Chrysler debt significantly. Maybe the hedge funds with an interest in GM will be put on notice that our President Obama will not hesitate to put them into bankruptcy!

[Still Sensible]

4. And I am glad that it appears

Chrysler will survive, while the hedge funds will likely get very little. The hedge funds were apparently betting that everybody was so scared of the "B" word, that they would have a better chance to get more money if they kept holding out. Well, guess what? They lost that bet and the company will go forward with their labor apparently protected in an acceptable agreement, large creditors already set up to accept partial compensation and the hedgies out in the cold looking for scraps. Couldn't happen to a nicer bunch of unregulated, greedy assholes IMO.

[WriteDown]

6. The ignorance on this issue is astounding.

For one thing, Oppenheimer isn’t even a hedge fund, it’s a mutual fund manager, which isn’t even close.

[xchrom]

8. was oppnheimer the only financial involved? nt

[WriteDown]

9. One of the big ones. nt

[xchrom]

13. but not the only one -- and the others were turned back to good effect, yes? nt

[WriteDown]

16. There were only 4 singled out, and Oppenheimer was one of

the 4. Mind you, that wasn't the only 4, just the big ones. Since Oppenheimer is very large I guess you could assign them 40% or more of the fault.

[Still Sensible]

15. Well, my comment was based on the reports

that the holdouts were "hedge funds," which I consider nothing more than unregulated stock manipulators. If one of the holdouts was Oppenheimer, then they have a lot to answer for siding with the hedge fund managers and holding out on a near done deal at what I expect will be the expense of their mutuel funds. It looks like other creditors were taking something like 30 cents on the dollar. I'll be interested to see what the bankruptcy court ends up awarding them.

[WriteDown]

17. That is precisley the problem...

The reporters have no grasp of the situation.

[Psephos]

20. Here, read this - you can't make good judgments on bad assumptions

http://www.ft.com/cms/s/0/bb1d8d00-359d-11de-a997-00144feabdc0.html?nclick_check=1

This "evil hedge fund" meme helps no one. The real issue here is whether political fiat can or should trump the rule of law.

[hugo_from_TN]

10. I predict the holdouts will get more in bankruptcy than the deal offered.

Whether you like them or not, they are not stupid and they understand bankruptcy laws and how the courts will rank the different debt holders.

We'll see.

[w4rma]

12. They're vultures. They bet that the government would bail them out. It didn't this time. (nt)

[Fire_Medic_Dave]

22. As others have noted the obligations to them are secured debt.

[tclambert]

14. And their names are:

Oppenheimer Funds, Perella Weinberg Partners, and Stairway Capital. Those three forced Chrysler into bankruptcy hoping to make a little extra for themselves, which would have come ultimately from taxpayers. It will cost Chrysler market share and thus reduce Chrysler's value. For that, they should make less return on the dollar than any other creditor.

[hugo_from_TN]

19. I read it was a group of 30 hedge funds.

They just named the top 3 or 4.

[Freddie Stubbs]

18. Which specific banks are you talking about?

:shrug:

[xchrom]

5. wake up call to hedge funds -- stop holding people hostage. nt

[WriteDown]

7. See post #6. nt

[Sgent]

21. The unions are in trouble

the hedge funds knew what they were doing.

Pension obligations are unsecured debt -- the debt the hedge funds hold is secured. The secured creditors have to be made whole before the unsecured ones get anything.

[Romulox]

23. Thanks for this post. Most here don't understand this, and the Obama admin is being less than frank

about the issue. If you "read between the lines", they are readying the pensioners for reduced benefits to be paid by the PBGC.