Per CNBC's Rebecca Jarvis, who also reports that Thomas Lauria, a lawyer for the group, told U.S. Bankruptcy Judge Arthur Gonzalez that "people in chat rooms" were saying threatening things in the general direction of his clients (who also "felt" their reputations were threatened by the White House, though Lauria "did not specifically say" that threats were made by the administration, only that Obama's words during his press conference last week were a matter of concern). Oh, and he'd like to see lenders get 50 cents on the dollar.
Judge Denies Request To Keep Chrysler Secured Lenders' Names Under Seal
Posted by Bess Levin, May 05, 2009, 4:28pm
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Posted by guest , May 05, 2009 4:40PM
aww, they felt threatened? grow up
Posted by guest , May 05, 2009 4:41PM
People need to stop fearing violence if they are outed. This nation lost the will to kill a long time ago. Unfortunately that's painfully apparent in Iraq and Afghanistan.
Posted by guest , May 05, 2009 4:42PM
hmmm, if he wasn't lying during that radio interview last week, why would he bring that to the table today? cause he was BS'ing?
Posted by guest , May 05, 2009 4:43PM
Be very afraid. Obama's suit has very wide lapels.
Posted by guest , May 05, 2009 4:45PM
Let the pitchfork-brandishing mobs loose! Let the populism begin!
Posted by guest , May 05, 2009 4:47PM
@5 the populist mobs will have to wait; there's a pitchfork shortage at Wal-Mart.
Posted by guest , May 05, 2009 4:50PM
Thomas Lauria if you have something to say then say it, if not STFU! Way to stand up for your clients, you're either a liar or a pussy I just can't yet.
Posted by guest , May 05, 2009 4:51PM
Hey it's just business. The lenders want a better deal than other stakeholders (along with a dimunition of the total enterprise value of the company because secured creditors only care about value being >= their indebtedness), and if all it takes is some tarnishing of their images and potential violence to make them relent, why should anyone care? Is hardball only a tactic that companies and wealthy investors should be allowed to deploy?
Posted by guest , May 05, 2009 4:54PM
@7- he's a liar. if the threats by the administration actually happened, he would've said so. they didn't, which is why he only claimed they did on the radio, and not in a courtroom.
Posted by american bandersnatch , May 05, 2009 4:55PM
@8 - Brilliant satire (I hope)
Posted by guest , May 05, 2009 4:58PM
@8 is there something wrong with SECURED creditors not really caring about the other people. They were the ones smart enough to reuqire collateral. Screw the idiot unsecured creditors and shareholders.
Posted by guest , May 05, 2009 4:58PM
@10 Obviously not satire
@8 Right, the secured lenders are wrong for wanting "a better deal than other stakeholders." I hate to say it, but go back to yahoo finance for god's sake.
Posted by guest , May 05, 2009 5:00PM
I'm upset they are only asking for $50. They should demand what they are owed to the full extent of their contract.
Posted by guest , May 05, 2009 5:03PM
Lauria sounds like a loser, even a bigger one as time goes. There's a reason they call lawyers liars for hire.
Posted by american bandersnatch , May 05, 2009 5:04PM
We should post names and pictures of the secured lenders kids, along with home and school addresses. That will make them think twice!
Posted by guest , May 05, 2009 5:04PM
threats by chat rooms? seriously? pussy.
Posted by Anal_yst , May 05, 2009 5:11PM
Screw it, just let the VEBA/UAW have the thing. They'll be BK in <12 months, even with successive trips back for a suckle at the Gov't teat. Perhaps, maybe then, the rest of the country will realize that the "evil capitalist hedge funds" aren't so evil after all... (0<p<~3%)
Posted by guest , May 05, 2009 5:12PM
@11 ...assuming the value of the collateral is worth the value of the claims.
Posted by american bandersnatch , May 05, 2009 5:15PM
@ Anal_yst: Worth doing just to watch the decisions made by union management as the thing comes apart.
Posted by guest , May 05, 2009 5:18PM
Hedge funds aren't "evil". "Stupid", yes, but "evil"? No.
Posted by Anal_yst , May 05, 2009 5:22PM
@20
Who is your connections?!?!?!
Posted by guest , May 05, 2009 5:26PM
18: if it's not then the UAW is getting 55% of nothing and the President should stfu.
Posted by guest , May 05, 2009 5:32PM
I wonder if DB is one of those scary "chat rooms".
Personally I think they deserve their fucking money but i do wonder how many of these assholes voted for Obama and are now so pissed off they have to reap what they sow. Pay back is a bitch.
Posted by Lowly Assistant , May 05, 2009 5:33PM
What happened to this place?
Posted by guest , May 05, 2009 5:39PM
@22 Please refer to Chapter 11 of your text, where we learned the difference between enterprise value and liquidation value.
Posted by guest , May 05, 2009 5:40PM
Lauria, the lawyer, is simply billing. There is no story here.
Posted by guest , May 05, 2009 5:41PM
@11 you mean the american tax payer right? I mena we did give this backward shit ass company HUGE BAILOUT MONEY!
so when you say "Screw the idiot unsecured creditors and shareholders"
you really mean us. Or put another way...YOU!
Posted by guest , May 05, 2009 5:43PM
@lowly- you take one post in which people are leaving retarded comments and go "what happened to this place"? lose the day trader mentality.
Posted by guest , May 05, 2009 5:45PM
@27
You are dazed and confused.
Posted by guest , May 05, 2009 5:48PM
Lauria also noted this group of threatmakers exhibited limitless sexual prowess and had seven-figure plus incomes.
Posted by guest , May 05, 2009 5:53PM
Bess, your commentary on this is so much sharper and wittier than EP's. EP's only schtick is to blame Obama and dispense longwinded rants about socialism!!!11! EP on a good day should be limited to opening bell; the interesting stories should be yours.
Posted by guest , May 05, 2009 5:57PM
@27
11 here. No joke! Really! Of course the government has no power to get it's money back by other means, right?
@ 18
That's a moot point, if you have a secured claim it's on a specific piece of collateral. If you didn't give yourself enough cushion to sell it in BK and recoup most of your loan, your as dumb as the unsecured creditors.
Posted by Lowly Assistant , May 05, 2009 5:58PM
28,
Well, I really wanted to remind everyone of contract law, traditional bankruptcy proceedings; you know, how the world works (or supposedly did). The fact that this has been discussed ad nauseum since Thursday is a bit crazy, considering a decent amount of people on dealbreaker (a financial website) are bemoaning hedge funds. But, what the fuck ever. Color me a muddled pond of oil on a late summer's eve (yep).
Posted by guest , May 05, 2009 6:01PM
Screw those rogue speculators holding
secured credit. I don't stand with those greedy bastards.
I stand with the good old-fashioned folks holding on to the obviously more prudent unsecured portions of Chrysler's credit.
Posted by guest , May 05, 2009 6:02PM
@27, the senior secured lenders should get 100 cents on the dollar--or something very close to it--before anyone else gets a damn cent. That's how capital structures are supposed to work. That's how they've worked back to the days of Cosimo de Medici.
So yes, I'd be willing to forgo my 1/300,000,000th share of the taxpayer-funded unsecured claim to see that contract law and collateral claims in this country aren't flushed down the fuckin toilet.
-not 11
Posted by guest , May 05, 2009 6:05PM
@ 35 I'm all in favor of calling BS on Obama & Co's strong arm tactics, but you obviously don't know all that much about bankruptcy law. Secured lenders aren't entitled to par value before unsecured sees a dime. Also, a judge can rule that a small tranche of secured credit may have interests that royally screw the rest of the capital structure and therefore shouldn't get the same "voice" as others, however subordinated.
Posted by guest , May 05, 2009 6:09PM
35: Couple of things. First, the most senior secured lender for Chryler is the UST. Second, only in a Chapter 7, when there is an actual liquidation, will the senior secured lenders get paid out before everyone else. If that were the case, the UST would get everything (or less than) and the other senior secured lenders would get nothing. So, they'd be F-ed regardless. In a Chapter 11, especially a pre-pack, everyone takes a haircut so the company will remain viable. They do this because they know this is a better deal than they would get in a liquidation. They all know this right now, so their bitching falls on deaf ears for me.
Posted by guest , May 05, 2009 6:19PM
@ 37 - not sure which slice you are talking about, but the proposed dip is actually junior to first lien. Not sure of earlier slice that was given.
Posted by guest , May 05, 2009 6:27PM
@37, You're saying the UST just leapt to the front of the line when they inufused capital last year? I don't think so, bud.
And there are many cases where liquidation would yield more to the senior secured than a haircut to maintain going concern.
@36, Unfortunately I know more than I care to. There are exceptions in Chapter 11 (and it depends on the judge), but my point was that 50 cents on the dollar is a pretty low payout for the secured claims if the unsecured claims get anything. Generally a loan secured by collateral gives itself cushion so that it gets paid back close to par in liquidation, which they could threaten to force (again, depending on the judge).
Posted by guest , May 05, 2009 6:32PM
@39 Yes, that's what he's saying, and it happens often. That's what DIP financing is all about. If the Company would have to liquidate without additional financing and the senior secured would take a larger haircut in liquidation than in subordination, then it's to their advantage to let another creditor jump ahead of them.
--not 37.
Posted by guest , May 05, 2009 6:35PM
So, if I say something like "I hope this motherfucking lawyer Lauria rots in hell for eternity" would that be considered a death threat? Is this a chat room? I'm confused.
Posted by chernevik , May 05, 2009 6:37PM
I'm not a lawyer, but I don't see how the initial Treasury injection can be a DIP financing as the company wasn't in BK at the time. It could be senior without being DIP.
Hopefully the dissenting creditors will make better arguments than they did for this business about sealing their names.
Posted by legal eagle , May 05, 2009 6:43PM
42: If it's like the GM UST agreement, then the loan converts into a DIP loan upon BK. Also, regarding the liens, Chrysler's senior secured lenders probably had to enter into waivers to either waive the limitations on liens to allow the UST either a first or second priority lien, depending on the collateral. Not that abnormal for restructuring deals: "Waive your rights or we won't lend and the company goes under."
Posted by guest , May 05, 2009 6:52PM
@42, I did not mean to imply that the UST's claim was DIP financing; I was just using DIP financing as an illustration of how common it is for the senior secured to get "leap-frogged" by other claims. legal eagle has it right.
--40
Posted by guest , May 05, 2009 6:58PM
@40, was referring to the pre-DIP infusion
@42/43, if it's true that the initial UST injection converts to DIP at BK, then never mind to all I (@37/39) said.
I'm surprised the senior secured lenders would have agreed to such a conversion instead of attempting to force liquidation then. Then again, I'm an energy guy, and I don't know anything about autoplant liquidation. Power plants and pipelines are probably more fungible.
Posted by guest , May 05, 2009 7:18PM
Dear lord, this thread is misinformed.
First, there is no such thing as a prepetition loan that converts to a DIP.
Second, a DIP doesn't necessarily prime a prepeition lien. If it seeks to prime a prepetition lien, the DIP has to proviude adequate protection to the prepetition lien. That is messy (usually why DIP lenders nowadays are ppl in the prepetition loan).
Third, a secured creditor only has security to the amount of its collateral. By providing the senior secureds with only .22, the implied value of the collateral is about $2 billion, which should be laughable on its face.
Hope this helps. Jesus, I used to come here to get educated.
Posted by legal eagle , May 05, 2009 7:30PM
46: Directly from the UST Loan and Security Agreement:
"upon the occurrence of an Event of Default referred to in Sections 9(i) or (j) [BK], the Lender shall have the exclusive right, exercisable at its option, to convert this Loan Agreement into a debtor-in-possession facility in form and substance acceptable to the Lender."
Posted by guest , May 05, 2009 7:32PM
@ 46 - Amen to that. Things sure change fast...
Posted by guest , May 05, 2009 7:33PM
Leagal eagle:
1. Probably ipso facto clause
2. If you think that's all it takes to get it into a DIP, I hope you don't practice BK. You still have to comply with the code provisions that allow DIPs.
Posted by legal eagle , May 05, 2009 7:38PM
Not a BK attorney nor do I ever deal with it, I just know the UST Loan. Just making the point that the language is there.
Posted by guest , May 05, 2009 7:45PM
Legal eagle:
Fair enough. What is happening to the secured lenders here is insane.
Posted by guest , May 05, 2009 7:48PM
Sounds like some people on here are really been into the details of this.
As a casual (if that) observer, could someone tell me what specific assets are securing the senior debt here (inventory, A/R?).
Posted by guest , May 05, 2009 8:24PM
@52 1,219 PT Crusers.
Posted by chernevik , May 05, 2009 8:35PM
Thanks for the discussion.
What does the law say about side deals among claimants to secure their votes? For example, in a more typical process, can a party pay some of a class' creditors to secure that class' vote? Does the law have any requirements for treatment of a class in addition to the class vote?
I'm wondering if the dissenting secureds can argue that the TARP lenders are voting for a lousy deal here in return for preferential treatment of their TARP positions. And I'm wondering if that's even a viable argument, as they'd also have to argue that the deal is so bad that there must be some interest outside this situation.
Posted by guest , May 05, 2009 8:35PM
Substantially all of the assets
Posted by guest , May 05, 2009 8:38PM
@ 53 they shoulda taken the deal. No way that brings in more than $0.30 on the dollar.
Posted by guest , May 05, 2009 9:51PM
I with @Anal_yst and @19, it's almost worth the tax dollars sunk into Chrysler to see the union and the administration/govt make a complete mess of things. Just think of it as entertainment expenses.
Posted by guest , May 05, 2009 10:29PM
BLACK DEVIL
Posted by guest , May 05, 2009 10:35PM
54, not a bankruptcy attorney, but you can buy/trade claims for the purpose of obtaining votes so long as it is not in "bad faith." No single definition of "bad faith." Like if a creditor is a competitor of the debtor, and he is buying up claims to vote against a reorg plan to gain a competitive advantage in the market, then this will likely be bad faith. But if a creditor is just trying to maximize the returns on his claims and buys up votes to do so, this might not be bad faith.
Posted by Finnegan , May 05, 2009 10:56PM
I'm thinking the Administration really does not care what happens with Chrysler beyond this initial effort (beyond most people's reasonable desire to see things work rather than fail).
They basically get to kick the ball downfield, with the union then responsible for success or failure and putting the ball (cars) into the net (buyers hands).
He (Obama) gets credit for not letting the industry collapse, and union gets credit when and if it eventually does collapse.
The legal stuff is all just positioning.
Posted by guest , May 05, 2009 11:53PM
@ 59,
Er...that's not right. A creditor can buy claims to get a blocking position in a class of claims, but a debtor has to treat all similarly situated creditors the same - that's the touchstone of treatment of creditors.
No freaking way can a debtor pay some creditors in a class (i.e., unsecured creditors) more than others.
-46
Posted by guest , May 06, 2009 12:06AM
There is no way that the collateral is worth only $2B here. If the Jaguar/Land Rover brand is worth $2B to Tata (even at inflated bubble prices), then the Jeep brand is worth at least as much. Add to that the factories and the real estate etc and $2B is a travesty.
Posted by guest , May 06, 2009 12:29AM
61, we're not disagreeing on anything. I read 54's question as to whether creditors could buy/sell claims. A debtor who is paying off unsecured creditors before secured creditors is clearly grounds for an absolute priority rule violation. But apparently these concerns aren't controlling in a 363 sale situation. -59
Posted by guest , May 06, 2009 11:05AM
25: in the case of this pos liquidation value > EV
Posted by guest , May 06, 2009 12:53PM
The dissident creditors only hold $300 million of Chrysler’s $6.9 billion of secured debt. how was it that they have any chance of blocking the gov’s proposed plan in the first place? I thought you only needed 2/3 of claim amount for each security class to ok the plan?
Posted by guest , May 06, 2009 1:03PM
When I declared bankruptcy, I kept my ivory pipe collection hidden from all of the attorneys. You think I'm going to let those bastards get their mitts on my pipes? You've got another thing coming.
The Guy From Delaware
Posted by guest , May 06, 2009 5:24PM
65: different classes?