The American Spectator

ncatty| 6.8.09 @ 4:42PM

There will be more lawsuits by institutional investors. The pension funds invested in bonds because of their preferred treatment in the event of disaster, like a bankruptcy. In other words, they sought safety relying on the "rules", including bankruptcy rules. Turns out the bunch in the administration don't care about "rules." bring on the lawsuits! Think how quickly the Supreme Court has gotten involved! This may be the check and balance we have been missing.

ncatty| 6.8.09 @ 4:44PM

Let me add that Article I, section 8 of the constitution authorizes bankruptcy. I don't see anything in the constitution that allows the government to buy GM.

John| 6.8.09 @ 5:31PM

EXCEPT...

Chrysler is an LLC. It does not have stock, does not list as a public offering, therefore the investment contracts are private.

LLC's are wierd in that the owner (in most states) can merely shutter the whole thing turn out the lights... drop the keys on the desk of the bankruptcy people... and walk away.

Cerberus can allow the entire non-performing pile of assests to be haggled over by the vultures...

That is not to say what has gone on is fair or unfair, legal or illegal, constitutional or unconstitutional. What it says is that given the circumstances, the groups making the fuss are likely to get far less if they win.

It is sort of like driving a car. You had the right of way at the four way stop, but the dump truck that blew the stop sign at 85 miles per hour wasn't stopped by the traffic regulation. St. Peter's blank stare might be a tad unnerving, but justified.

The One and his Syndicate are handling this badly, that is true. But people's expectations are also a tad unrealistic as well.

Sometimes you take the $.30 and walk away glad it isn't car parts and a closed factory with no customers for the asset auction.

r/John

Hermit| 6.8.09 @ 6:59PM

John,
I am not certain I understand your post. How does the type of entity impact the outcome?

IT is not that Chrysler is an LLC that has maed this a sham but the intervention of team O and thier blatant skewing of the results toward a major contributor the UAW....

Whether or not Chrysler is an LLC, S Corp, C corp or individual. It is the intervention of the administration and favored treatment of the union that the intervention forced that makes this unfair and I believe unconstitutional.

I hope this is the beginning of stopping the outrage and overreach of the administration.

I know I am probably over optimistic. As to what eventually happens to the bond holders I am less concerned...

I am in favor of a fair predictable honest process.

If one wins a few hands from a stacked deck, in the long run you know when the pot is right you too will be cleaned out..

Interested Conservative| 6.8.09 @ 7:16PM

John stumpoed me as well. Granted, there is no common stock, but the bonds are instruments clearly governed by various applicable bankruptcy provisions, whether statutory or case law. How does the status of the debtor affect the nature of its obligations to the various creditors? Did the bondholders agree with the disposition of assets? Would they prefer an ownership stake akin to the UAW or US Treasury? Did the bankruptcy court address these basic issues?

Richard Baker| 6.8.09 @ 8:05PM

When the creditors who are first in line to be repaid have the President and his folks demand that they suck hind tit , this is dangerous. When these creditors win their case then the Rule of Law has a chance against Obama the Lawless. Without contracts and law, no one in their right minds would invest in any company. For someone who is constantly referred to as a "Constitutional lawyer", Obama has the instincts and inclinations of Al Capone and Lucky Luciano. Keep your powder dry.

Matthew Vadum| 6.8.09 @ 8:30PM

Doug: You missed out on an awesome pun in your hed:

Supreme Court Fiat Blocks Chrysler Sale to Fiat

John| 6.8.09 @ 9:57PM

Y'all haven't ever bought a house near the end of a development, haven't you?

1. An LLC is a Limited Liability Corporation. It is a privately held corporate entity. Most seem to be operated as wholly own subsidiairies of larger corporations.

2. Let us say that you purchase a house from ABC Corporation. The development is over 75% complete. Well, the contracts are signed by ABC Corp. The sale is promised at a price and in a certain time frame. When the time comes close to settlement, and the house is complete, suddenly the mail starts coming in from ABC Corp at Suckers Landing, LLC.

ABC Corp has "sold" the entire business to ABC Corp at Suckers Landing, LLC. And Funny but ABCSL, LLC seemst to be plumb out of money, and is having trouble completing your house, and your street...

Of course ABC Corp is no where to be found in respect to who to go to for the final product. It seems that ABC Corp is no longer liable for the home... That contract was SOLD to ABC at Suckers... and gee whiz... and too bad that company just doesn't have the resources to finish your house properly, and well.. You can sue... but there isn't any money left, and you can't go after ABC Corp because well... your contract was purchased by the LLC...

(Personal experience folks...) Took the company to the Commonwealth... gee it got fined the maximum of $2500 and lost its license for 10 years... wow... a bankrupt company was fined something that it couldn't pay, and lost a license it didn't actually have.

Here's the skinny guys. Contracts are paper. They are meaningless if the right lawyers and the right conditions are applied. Once a company is a wholly owned subsidiary, the owner (majority owner in this case) can close the doors, turn out the lights, and allow the company to halt. The owner merely turns over the keys to the bankruptcy judge... and surrenders the remaining assets. The ability to go after the owner is limited by the LLC. (Hence the name)

It is done all the time in retail. Ever see a small shop close, or a franchise go belly up? Everything including the cash in the drawers is left right where it is.

So... what would the effect of a full liquidation of Chrysler's dead asstets be? Who knows?

I do know that a liquidation of a dead automobile company, its dead supply chain, its inactive inventory, and its various capital pieces would garner some sort of recoverable amount for creditors... IN A GOOD ECONOMY.

Here is where the desire to stick it to Obama runs in to practical reality. If Chrysler liquidates, not only do thousands of people lose jobs, but multiple thousands of people lose jobs, and they are unlikely to recover from the loss anytime soon. The dealership hits are bad enough. But the entire corporation going down the toilet would start a cascade failure of parts manufactuers, suppliers, and distributors.

Owners are potentially out of luck because new automobiles are difficult to repair at service stations and independent shops due to proprietary software and hardware that these cars are now loaded with.

So, what you have is a situation like a protection racket. "You're gettin' 30 on the dollar... or you are getting nothing but a problem walking... capice?"

The creditors either accept what they were offered or they risk getting NOTHING or chump change. The current economy says that a liquidated Chrysler goes to Fiat anyway - at least what it wants... and the rest gets sold as salvage... or abandoned like downtown Detroit.

The investors are unlikely to get a better deal. The Unions didn't get much of anything really. No cash... just "shares" and a vague promise of employment if this works out.

The One has screwed this one up royally... but he had help. Frankly these two bankruptcies have little parallel in our history, since only one "American" automobile manufacturer will be left intact,( and it is barely so). The numbers say that Ford is right behind the other two, anyway.

Stand on ceremony all you want. Rule of law and all that... well laws can and have been changed. My guess is they will again.

I doubt the Supremes will stop the sale the way that it is going. It might entertain post bankruptcy lawsuits being brought at lower court levels. This is all being made up as it goes along, that is the only thing that I am sure of anymore.

r/John

Paul| 6.8.09 @ 9:59PM

"I still wouldn't be surprised if the Court doesn't lift its stay after a hearing...".

Don't you mean to say that you wouldn't be surprised if it did lift its stay?

Jeez, man, I hope you don't write for a living!

John| 6.8.09 @ 10:03PM

BTW,

For those making fun of FIAT. FIAT is also Alfa Romeo, and Ferrari. My Italian soul would love to be able to drop by the local Chrysler dealer for a AR Spyder, at least for a test drive.

It might work. If given a chance.

A chance to succeed is what America is all about, isn't it? Now if we could just get The One Regime to fail faster than GM.

r/John

John| 6.8.09 @ 10:08PM

Pardonez-moi... rented fingers... and don't type on laptop keyboards through tiny windows while sitting in an easy chair.

Yes you are correct:

I would not be surprised if the court lifted its stay fairly quickly after a hearing on the matter.

Better? (if a bit passive voiced.)

Cheers,

John

Patriot| 6.8.09 @ 11:54PM

John, does your Italian soul love Fascists? Perhaps you think Barack Obama is the re-incarnation of your beloved Benito Mussolini, Duce of Fascism. Or are you just hoping?

Cheers, An American Patriot

Hydraulic Valves| 6.9.09 @ 1:49AM

I don't see anything in the constitution that allows the government to buy GM.

CC Ryder| 6.9.09 @ 2:41AM

You're right, Valves. Looks like Obama was just paying off his Union cronies. Cronyism at its ugliest.

Michael Dooley| 6.9.09 @ 7:53AM

The case that Indiana has brought to the court is one charging that the administration is arbitrarily disregarding bankruptcy laws. Indiana bought instruments which were "secured investments"--meaning that in the event of collapse they would come in first in a legal settlement. What the administration has done is placing the Hoosier pension funds last favoring the unions by backing up their pensions and handing over a large part of Chrysler to them as well. What is at issue is contract law and the threat the administration’s actions will have on the confidence and expectations of the business and financial sectors across the entire economy.

Indiana may still only get cents on the dollar in any case. But if any administration is able to tear up contracts and ignore bankruptcy laws in favor of its own designs, no established financial case law nor legislation is safe.

John| 6.9.09 @ 8:33AM

Give Michael Dooley the cookie...

Patriot... 1. government has been involved in large business dealings since the Erie Canal... Credit Mobile for the Transcontinental Railroad anyone? So please spare calling names. I am no Fascist... (I find the corporate-state to be an evil mess.) Also, observing things as they ARE versus what we would wish them to be might wake a few more people out of their torpor and get them to leave their phone booths. The Obamessiah is a dedicated Fascist and is going about establishing his corporate state with his chin jutting visage pasted on every wall in all its tricolor revolutionary expressionism.

2. The facts on the ground are that Mr. Dooley is solid dead on correct. The One administration is paying off the interests that grease its collective palm, first. The distasteful choice is to live with a Chrysler-FIAT deal (which looks like FIAT has decided will go through from its side) or liquidation at spare pennies on the dollar and an unemployment rate pushing above 10, as the cascade failure starts taking out other businesses.

So, the Bamster's Ministers are going to do their Corporate-State best to prevent that from happening.

The New York State Senate was just taken by the GOP (ok a slightly RINO wierd flavor of GOP, but that is a major upset.), Virginia looks like it will elect a GOP sweep in its top statewide office races this year, and funny thing... sort of wishy washy RINO or not... Christie looks like he has a shot in the Peoples' Democratic Republic of Jersey.

Stuff like the auto bailouts and takeovers are starting to sour the public on The One. The state run media will butter it over for as long as possible... but heat melts butter, doesn't it?

In the mean time... maybe that test drive in that hot Alfa-Romeo will salve the wound? No?

Sad, because an orderly, legal Chap 11 for Chrysler in 2007-2008 would have married it with FIAT anyway.

Coulda... woulda... shoulda I suppose.

Ciao...
Gianni

Patriot| 6.9.09 @ 3:53PM

I was just 'Fascist fishing', John. Glad to see you're not of their ilk.
I wouldn't mind a test drive in a hot car, but my American soul craves a home-grown vehicle in which to do it. Any ideas?

Patriot| 6.9.09 @ 4:44PM

A test drive in a Ferrari? I guess even my French-American soul could be Italian for a little while. ;)

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