Thursday, April 30, 2009

Some of Chrysler's Bondholders Say No to Obama's Deal

Chrysler Will File for Bankruptcy, Official Says (Update3) - Bloomberg.com

The deal offered by the Obama team is said by Bloomberg to have been worth about 33 cents on the dollar, which is, I believe, a lower percentage than that the union was to have received for Chysler's obligations to it.

Frankly, not being a lawyer, I don't see the basis for favoring the union's debt over the supposedly secured, and supposedly senior debt held by the bondholders.

Obviously, the politics of the situation would seem to link the priorities of the union and the Obama administration.

All in all, this may be a favorable outcome for the rule of law
over politics and for all parties. One gets the sense that if the deal at GM or Chrysler winds up being too much of a politically driven ongoing transfer of more and more and more billions in defacto taxpayer subsidies to the UAW, at the expense of everyone else's interest, through the conduit of zombie car companies, that an outraged public very likely would soon decide to go on a buyer's strike against the companies involved just to force an end to the misery once for all.


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