This from Robert Saloman, eminently worth reading.
If you think it's just dry stuff about bankers and lawyers, read it again. It should put a chill up your spine, and cause you to cheer for the creditors who won't allow the Obama White House to subvert the rule of law, and bully them for good measure.
At bottom, the problems with this 'bankruptcy' are ethical:
1. The senior secured lenders are, by law, entitled to stand first in line. There are assets to liquidate (or reorganize and turn into money-makers) to settle their claims. Chrysler certainly holds the rights to thousands of design patents on vehicles, parts, and manufacturing processes. For instance, the mini-van is a very serviceable configuration--millions of moms with kids around the country can't be that wrong. The Dodge pickups, if marketed well, can give the Ford F-150/250/350 lines a real run for their money. Why can't two smaller(NON-UNION!) firms be organized to manufacture and distribute these vehicle lines? Without the horrendous per-vehicle expense added by the UAW's health/pension/work rules/featherbedding, these can be delivered to market profitably. We will always have mommies, farmers, ranchers, building contractors and hunting/fishing enthusiasts who will buy these vehicles. Add in the patents on parts and processes, available to sell or license, and Chrysler looks like a cash orchard awaiting harvest.
2. Why the **&&@@@@!!!! is the UAW being offered 55% of Chrysler? These clowns are in great part responsible for this train wreck. Remember how they would call a strike on one of the Big Three in order to force it to knuckle under, and then pick off the other two in succession. The only upside is that a majority stake might force them to act like adults for the first time in history. They can't 'stick it to The Man' if they themselves are 'The Man'. But after seven decades of wanton childishness, how optimistically should we await this 'conversion experience', this epiphany, this Damascus Road moment, this change of heart?
3. We the taxpayers have been dragged involuntarily, and under false pretenses, into this mess. We can kiss almost every penny shoveled in Chrysler's direction goodbye. Until today, I didn't know that we were protected by a third priority lien, which means we finish about twenty lengths behind the UAW, which (immorally and erroneously) has been positioned as the defacto holder of the first lien. Those promises made to UAW were premised on the expectation that Chrysler would make profit, from which the health and pension bennies would be paid. No profit, no bennies; and it's not up to us to cough up just because profit wasn't made.
So, when is a senior secured debt not a senior secured debt?
When the UAW is in the room? When the White House(of either party) decides that a bankrupt enterprise is 'too big to fail'?
And, next time, when a pension fund manager looks at buying senior secured debt issued by Corporation Q....(remembering of course that the manager bears fiduciary responsibility for his actions)???
Personally, I hope the senior debt holders raise unshirted Cain in court, and tie up the process for months. There's enough Chrysler inventory out there to keep purchasers happy, so the plants can stay closed into next year, no problem.
This isn't about the survival of Chrysler.
It is about the survival of the rule of law.
It is a question of ethics.
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