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As the U.S.
Bankruptcy Court, Southern District of New York, gives
Chrysler approval to release funds to suppliers, a group of
secured creditors have been in court to give a deposition
that they intend to fight against the settlement that has
been hammered out in order to facilitate the Fiat alliance.
The creditors,
mostly private equity funds and hedge funds, are the rump of
a larger group of secured lenders that were owed US$6.9 billion by
Chrysler. However the key players, including banking giants
JP Morgan Chase and Citibank, were persuaded before the
April 30 deadline to settle for a smaller payout of US$2 billion,
leaving some of the smaller players resolutely holding out. The have
called themselves the 'Chrysler non-TARP Lenders' in ironic
reference to the fact that the U.S. Treasury Department has
handed out bailout payments to many of the key creditors. The group
told bankruptcy judge Arthur Gonzalez today that they had
received
'death threats' ever since President Obama's televised
address which announced the Chapter 11 process last week.
"While the
present case is unusual in many ways, perhaps the most
extraordinary is the unprecedented involvement of the United
States government. Never before has the President of the
United States announced a chapter 11 filing in a national
address," said the 'Chrysler Non-TARP Lenders' in their
written deposition to the U.S. Bankruptcy Court, Southern District
of New York, this morning. "Even more remarkably," the
opening statement continued the President singled out
creditors who did not agree to the government’s intentions
regarding Chrysler, which includes paying billions of
dollars to unsecured creditors while paying first-lien
secured creditors less than thirty cents on the dollar. The
President publicly chastised these secured creditors for
having the temerity to enforce their constitutional rights
in this court of law, branding them as “speculators,” making
clear that “I don’t stand with them.” The President’s
remarks announcing the bankruptcy filing are merely the most
public in a series of steps undertaken by the current
administration to subvert the rule of law by forcing
Chrysler stakeholders to agree to a sub rosa plan of
reorganisation which wholly ignores time honoured bankruptcy
principles. The government now comes before this Court and
trumpets the fact that many of Chrysler’s lenders have
succumbed to these coercive tactics. Indeed, a decreasing
number of creditors remain willing to ask this Court for
fair treatment under the law. The pressure on the Chrysler
Non-TARP Lenders grows by the hour. For this reason, a
number of lenders have sought representation in this case,
but only on the condition that their identity not be
disclosed publicly. Accordingly, the Chrysler Non-TARP
Lenders seek an order allowing White & Case to file its 2019
statement under seal, so that only the Court will know the
identity of the Chrysler Non-TARP Lenders. Denial of this
relief will force several of these lenders to surrender
their legal rights and agree to the government’s illegal
plan. Those lenders that continue to seek to enforce their
legal rights will be subjected to threats to their
reputations and businesses, public attack, and threats to
their safety. This cannot be allowed. Under these
circumstances, the Motion should be granted," the deposition
concluded.
Meanwhile the
U.S. Bankruptcy Court yesterday gave interim approval to
Chrysler for US$4.1 billion of Debtor-In-Possession (DIP)
financing, funded by the U.S. Treasury and Export
Development Canada, and the use of US$400 million of cash
collateral, enabling the company to meet its working capital
and general business needs going forward. Approval of
Chrysler’s DIP financing provides the company with resources
to continue “normal course” business operations pending
approval of the sale transaction with Fiat.
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