Until today the Chrysler bankruptcy had been proceeding smoothly. The judge had more or less taken the stance that getting the company out of bankruptcy was its best chance for success. Almost any challenge was dismissed, and the president's desire to see Chrysler out in 30 to 60 days looked feasible.
Well today that process hit a bit of a snag as the Court of Appeals for the Second Circuit held up the sale of Chrysler's assets to Fiat until an appeal by several Indiana state pension funds was heard. The funds, which represent various state employees, are arguing that the bankruptcy judge is unfairly favoring unsecured creditors over their secured positions. They also claim that the federal government can't give Chrysler TARP funds because it's not a financial institution.
AP: GM and Chrysler's Bankrupcty Cases at a Glance
flicmod says:
05:15 AM, 06/ 4/09
This is what happens when someone with large political sway tries to rush bankruptcy proceedings. If Obama was smart, he'd let the courts handle the issue like every other bankruptcy filing and keep his hands out of it like the Constitution tells him to do.
"They also claim that the federal government can't give Chrysler TARP funds because it's not a financial institution."
Exactly. Glad to hear someone involved knows what the limitations for TARP were. But where were these people when Bush started handing the money out in the first place?
estreka says:
07:55 AM, 06/ 4/09
I'm not so sure TARP was originally intended to be exclusive for banks. The premise seemed rather overarching.
This doesn't seem like a particularly large snag. A few creditors aren't going to derail the process, even if they are right.
I'm still impressed at the pace of these proceedings.
brn says:
08:21 AM, 06/ 4/09
"unfairly favors the interests of the company's unsecured stakeholders ahead of those of secured debtholders such as themselves"
If that's true, it absolutely needs to be corrected. Secured stakeholders take a lower return to be favored in situations just like this one. To favor the unsecured is unacceptable.
flicmod says:
08:29 AM, 06/ 4/09
estreka,
If you read the Emergency Economic Stabilization Act legislation, Congress defines (explicitly) that by "troubled assets" they mean "financial institutions".
Read it for yourself:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1424enr.txt.pdf
estreka says:
12:21 PM, 06/ 4/09
Thanks Flic.