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Judge Approves Chrysler’s ‘Asset Sale’

From an elated Washington Post:

Chrysler Gets Judge’s Approval for Asset Sale

By Tomoeh Murakami Tse
Monday, June 1, 2009

NEW YORK, June 1 — The lightning-speed journey of Chrysler through bankruptcy court has come to a conclusion, with a federal judge approving the government-orchestrated sale of the American icon to a new company run by Italian carmaker Fiat.

U.S. Bankruptcy Judge Arthur Gonzalez’s ruling — delivered in a 47-page opinion late last night — effectively marked the end of an era for an American industry icon and represented a success for the Obama administration, which played a key role in crafting the company’s restructuring strategy.

"The Sale Motion is granted in its entirety," Gonzalez wrote.

The judge’s decision came 31 days after Chrysler filed for bankruptcy, among the largest in U.S. history. The speed at which the case has proceeded may set a precedent for General Motors, which is widely expected to follow Chrysler into bankruptcy this morning.

The case reached its high-point last week when Chrysler urged Gonzalez — in 34 hours of hearings over three days — to approve its sale to an entity owned jointly by Fiat, the UAW and the U.S. and Canadian governments. More than 300 objections were filed, including lenders and dealers who tried to stop the sale by arguing that the process trampled their rights

Gonzalez’s decision — the 3,073rd document filed in the case — sided squarely with Chrysler…

A prominent objector to the sale has been a small group of first-lien lenders to Chrysler.

Three Indiana pension and construction funds, which hold about $42 million of the $6.9 billion in senior secured loans, contend that their property rights were violated and that the 29 cents on the dollar they would recover under the terms of the government-orchestrated sale is less than what junior lenders would get. The UAW, for example would receive a 55 percent stake in the new Chrysler. The new entity would get most of Chrysler’s assets in exchange for $2 billion, which would be distributed among the first-lien lenders. Fiat, which would manage the new Chrysler, is not putting up cash but will be providing technology for small, fuel-efficient vehicles, an area in which Chrysler has lagged its competitors.

Gonzalez ruled that the Chrysler was getting "fair value for the assets being sold" and that "not one penny" of the value of Chrysler’s assets is going to anyone other than the first-lien lenders.

The U.S. government has provided more than $8 billion in loans to Chrysler, which will largely be forgiven. The government will provide an additional $6 billion to the new Chrysler.

The Indiana pension funds also contend that the federal government exerted undue influence over the sale. Gonzalez, however, said that the extent to which the government should be involved in protecting certain industries is "a political decision, and the Court does not express a view as to the governmental entities’ involvement here." …

Objections filed by many of the 787 dealers that will be eliminated are to be heard further in a hearing Thursday. But Gonzalez’s ruling portends an uphill battle for the dealers…

Once again the stockholders, the backbone of US capitalism, get the short end of the stick.

And of course, once again, it is no accident.

This article was posted by Steve on Monday, June 1st, 2009. Comments are currently closed.

5 Responses to “Judge Approves Chrysler’s ‘Asset Sale’”

  1. pdsand says:

    “The Indiana pension funds also contend that the federal government exerted undue influence over the sale. Gonzalez, however, said that the extent to which the government should be involved in protecting certain industries is “a political decision, and the Court does not express a view as to the governmental entities’ involvement here.” …”

    The court does not express a view except to the extent that it endorses it whole heartedly. And with the speed that the Government has requested.

    I wonder, is there appeals from bankruptcy court? For the lenders that would be screwed here?

  2. Reality Bytes says:

    Obama Calls My Church One of “Those Speculators”

    I ran into an old timer from my church yesterday. Ken’s retired who like me served on our congregation’s finance committee. A little back ground:

    Built in 1821, this “typical” little white church sits at the heart of what was once a little Dutch farming town. In addition to the church building, sits its fellowship hall, the old parsonage & an ancient cemetery all on about six acres within what has become among the nations’ most valuable property.

    More recent arrivals have since spotted the town’s proximity to New York City. Due to the lack of municipal water & sewer systems, its multi acre zoning a direct result of the practicalities of managing some distance between one’s drinking water from the property’s septic systems). With the wealthy from Wall Street, Sports, Music & Movies, the town’s per capita income has become among the nations highest. Unfortunately, the less than 200 members of the188 year old congregation are mostly retirees & town’s people (painters, shop owners, the men & women who staff the volunteer fire department) on fixed incomes who barely manage to pay their property taxes, upkeep & living expenses. And so, while the Catholic Church down the street churns $10,000 – $14,000 a week in offerings, this little parish barely takes in $1,800 falling hundreds of dollars behind its needs every week.

    Over the years, the charity of some more wealthy aging members made gifts to the church enabling the congregation to live off the interest of what became about $400,000 in bonds & stocks…$125,000 OF WHICH WAS GM CORPORATE BONDS, which are now essentially worth less than the paper these certificates are printed on.

    So, here is one example of what our President, Mr. Barack H. Obama, has called “those speculators”; a “typical” little white church with an aging congregation; for many their only support; who shrug their shoulders in resignation as much as in bewilderment over what has happened to their country’s investor laws that were supposed to protect them but were overruled by the stroke of a pen, or less by their President.

    I’m not sure if I am the only one who sees the irony in this little church having a relatively young preacher, a graduate of Princeton yet that proudly supported & voted for our even younger feckless leader, Mr. Barack H. Obama. Alas, given the denial that abounds America these days, I probably am.

    I’ve used this analogy before, but our country under the unsteady hand of Captain Obama is like the Titanic. Though the ship’s engineer knew the vessel was doomed the moment it struck the iceberg, its captain believed he could maneuver it to safe harbor while the passengers went on into the night celebrating, drinking & dancing as if all would be well. This nation is approaching that moment that only the lead character of “Titanic”, the movie, Jack put so clearly…

    “This is it Rose! Hold on! Don’t Let Go of Me!”

    Alas, all we will have in the end will be ourselves…shivering alone & adrift into the abyss.

    Nearer My God to Thee indeed.

  3. Right of the People says:

    I guess Judge Gonzalez wanted to keep his job, huh?

    I love my country but I fear my government.

    10-7

    • TwilightZoned says:

      “…I fear my government.” That, my friend, is tyranny.

      “When governments fear people, there is liberty. When the people fear the government, there is tyranny.” Thomas Jefferson

  4. JohnMG says:

    …..”The Indiana pension funds also contend that the federal government exerted undue influence over the sale. Gonzalez, however, said that the extent to which the government should be involved in protecting certain industries is “a political decision, and the Court does not express a view as to the governmental entities’ involvement here.” …

    OK, if it’s a political decision, what about the rule of law? Separation of powers? Checks and balances?

    Oh, yeah. I forgot. “I won!”


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