Chrysler declares bankruptcy
Thursday, April 30th, 2009By Randall Rasmussen
Chrysler declared bankruptcy Wednesday after a group of creditors rejected terms offered by the Obama administration.
The group, calling itself “Non-Tarp Lenders to Chrysler,” preferred to take its chances in bankruptcy court than take President Obama’s offer.
Obama tried to blame the Chapter 11 bankruptcy on “speculators” who weren’t willing to “sacrifice.” “I don’t stand with those who held out when everyone else is making sacrifices,” Obama said.
Actually, the “speculators” have $6.9 billion invested in Chrysler, and they were offered $2 billion under the administration’s reorganization plan that would give the United Auto Workers union 55 percent of the company and an alliance with Italian automaker Fiat.
The “Non-Tarp Lenders” — who chose that name apparently to distinguish themselves from other creditors who have the administration’s boot on their necks because they took TARP money — think they can get a better deal with a legal solution in a court of law than with Obama’s political solution.
A similar scenario is unfolding at General Motors where bondholders with $27 billion in GM are being offered a 10 percent stake, while the government wants 50 percent of the company and the UAW 40 percent. According to a Wall Street Journal editorial, private investors will get 5 cents on the dollar on their investment, the government 87 cents on the dollar and the union 76 cents on the dollar.
The bondholders think they should have at least a 50 percent stake in the company.
One more reason why accepting money from the federal government is a bad idea.
I expect the administration to tell them to take it or leave it so that GM can be nationalized. Score another victory for the Friends of Obama.



