Tuesday, May 05, 2009

Bullying works 

Bloomberg reports that the group of dissidents holding Chrysler debt that are being compelled to surrender their legally obtained rights is shrinking.
JPMorgan Chase & Co., the largest lender on the loan, found the holdouts last week held about 10 percent of its value, less than $700 million. Now those still in the group, who plan to oppose the auction at a hearing today, own only about $300 million, the holdouts said in a bankruptcy court filing.

In the filing, the lenders told the judge in charge of Chrysler�s bankruptcy that the carmaker�s plan to auction its best assets later this month was unfair because it prevents creditors from using claims like a loan to make a non-cash bid.

�The proposed sale is not an arms� length bargain but rather is tainted by government domination and control,� the group said in the filing in U.S. Bankruptcy Court in New York....

The group asked U.S. Bankruptcy Judge Arthur Gonzalez not to reveal the identities of its members, after he ordered them yesterday to do so by today. Thomas Lauria, a lawyer for the group, told the judge some of his clients had received death threats after being identified.

Those named publicly include OppenheimerFunds Inc., Perella Weinberg Capital Management LP�s Xerion hedge fund and Stairway Capital Advisors. Perella withdrew its sale objection last week.

In their request, filed today in Manhattan court, the lenders said some joined only with the promise of anonymity and would leave if they were forced to reveal their identities.
It appears the Administration is using the ACORN bus tour trick to good effect. (Remember these guys? The Administration has now upgraded its posse to the White House press corps.)

Ed Morrissey notes that the story of Tom Lauria we told over the weekend has now been verified by others present. If the press would like to not look completely sycophantic, it should hunt down car czar Steve Rattner and get him on record denying that this happened in light of three people saying it did.

P.S. It's worth noting that this President also supported another perversion of bankruptcy law in its attempt at the mortgage cramdown, which the Senate rejected last week. So my characterization of this as an Obama violation of the rule of law is part of a pattern, not a one-off action. John Fund, in this morning's Political Diary from the Wall Street Journal (subscription req'd) states that bank opposition to the provision was strong and withstood another Chicago pol:
The key to the opposition's success was the refusal of major banks to cut a deal with Senate Majority Whip Dick Durbin, who told the banks that things would go even worse for them if they didn't knuckle under. The bill's opponents responded by contacting local banks and chambers of commerce in the home states of many Democrats. In turn, the local folks pointed out just how serious an abrogation of the rule of law the foreclosure bailout would represent.
On Chrysler, alas, the feds are using compliant TARP-drunk banks to do their bidding in dividing and conquering non-bank creditors.

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