Get your facts straight. Some arm twisting? The original dissedent group called themselves the “non-Tarp lenders.” Then Perella Weinberg was “directly threatened” by Auto task force (recall the national headlines that Lauria made when he told of this threat to a Detroit radio station). Then one by one the non-Tarp lenders caved after their liveihood was threatened by Rattner.

One of the big TARP lendsers was JP Morgan. Jamie Dimon has called this a bad deal for the senior creditors. So, why did they argree/ THey had no choice.

Your 29 cents number is what the Governemnt says it is worth in liquidation. THe non-tarp lenders thought it was worth 45 to 50 cents in liquidation.

Why don’t you do some real analysis instead of warmed over superficial political analysis. If that is too hard, then just palguize someone who does. Its good enough for Marureen Dowd.

The bondholders need to show irreparable harm to get the deal delayed, but when money is involved there rarely is irreparable harm if there is somebody to sue for money damages later.

Justice Ginsburg, or the whole Supreme Ct, can find that there is not irreparable harm, and it can allow the Fiat deal to close as is. Simultaneously, the Supreme Ct. can say with that denial that the bondholders have the right to sue the US Gov’t and the UAW for the loss of value due to not following bankruptcy priority. The Supreme Ct would have to find some way to limit the lawsuit as much as possible to the peculiar situation, such as when the government ends up with a controlling interest in the post bankrupt company.

It would be a win-win for all parties. The deal closes. Fiat gets Chrysler. The government and the UAW get what they want and the secured bondholders get their day in court to prove they are entitled to more money. If the bondholders win, the payout would come from the funds for US lawsuits and not from Chrysler or Fiat.

Clearly the theory of relativity – what goes up must come down, doesn’t apply to investment managers when they make bad decisions. See http://www.bobgreenfest.wordpress.com for additional insights.

Bob, if you think that the theory of relativity is “what goes up, must come down” then I have to question the value of any of your additional “insights”.

From a practical standpoint, however, this probably is the best deal the Indiana Pension Fund is going to get. But that should be its choice, not a mandate from the USG.

Am I correct in assuming that had the country been most lawful, read less hypocritical as in the advice that we’ve given out over the years to other governments assisting their banks and corporations, and not intervened at all, wouldn’t the Chrysler assets have been worth far less in liquidation or on bid?

My reasoning is that minus the government intervention, there would be far more assets potentially up for sale CONCURRENTLY, from banks and insurers, as well as car companies and their suppliers. Whether or not ‘no intervention’ would have been cataclysmic, hasn’t the intervention of the government so far, positively contributed to the amount the Indiana Pension fund THINKS they could get versus no intervention and liquidations everywhere?

It has to be political CYA. It’s a good story of the little guy fighting the Washington man, but what a horrible trade.

Given all that the UAW has to lose in liquidation, a case could be made that they could be persuaded to give up some of their equity to the dissident secured creditors in order to keep the deal moving forward.

As Fiat’s contribution to the New Chrysler is their technology and know-how in building small fuel efficient cars, its also likely that they would proceed even if the deal were somewhat less favorable as their is no other alternative way for them to gain such an inexpensive entry to the US market. As such, if necessary to get the deal done, Fiat is unlikely to walk.

As for the US, liquidation would transfer the UAW’s pension and older retiree health care obligations to the pension benefit guarantee fund and to Medicare. It would also mean even more lost jobs, and other costs to state and federal governments. One should not rule out some flexibility by the US as a result.

Thus, the secured creditors strategy to delay the Bankruptcy process could well result in a renegotiation of the deal structure that could lead the dissident secured creditors gaining either a larger cash payout or an equity enhancement, thereby improving their position.

Furthermore, as the deal appears to be proceeding without resolving this issue, there does not appear to be much downside for the dissident secured creditors. If they lose, they will get 29 cents on the dollar but if they succeed with their appeals they could get more as long as the New Chrysler emerges as a successful company with the means to pay their judgment.

If you invested the assets only in “safe” instruments – I assume you mean bond funds and the like – then the pool would run the very real risk of having inflation outstrip it’s value, since some significant portion of the liabilities would be long term (younger employees decades away from retirement).

The NY situation, while ugly, has no relevance here.

A non-profit like TIAA (Teacher’s Insurance) allows participants to allocate contributions to different funds that they manage. The most conservative is basically a bond fund. They also pioneered a stock fund in the 1950′s. This gives participants the option of setting their own threshold for “risk”.

In the case under discussion the public employees don’t have this sort of control, therefore one would think that the balance would tilt towards safety. Those who wanted to take on addition risk could avail themselves of IRA’s or other supplementary plans.

I still think the trustees were irresponsible and are trying to lay the blame elsewhere. As the scandals with the similar fund in NY continues to unfold it would be wise to “follow the money”. There were a whole bevy of intermediates getting fees for advice and lobbying the fund managers to invest in selected areas.

NO, the most important issue is how you negotiate to get the highest possible return. You do that by threatening, cajoling, acting irrational, whatever it takes.

As in mediation, it is not what is fair, it is what the parties agree to. Kudos to the bond holders for being as difficult as they can be.