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Holdouts on Chrysler Deal Say They Were 'Systematically Precluded' From Negotiations
A group of about 20 firms who declined to go along with the 11-th hour deal struck by the Obama administration to save Chrsyler from bankruptcy, has just released a statement claiming that the deal was unfair.
The group, which does not identify who they are but sources said includes boutique firm Perella Weinberg, hedge fund Stairway Capital and asset manager OppenheimerFund, said they had been “systematically precluded” from engaging in direct negotiations with the government, which they said had been largely done by four large banks that own 70 percent of the $6.9 billion in loans. Goldman Sachs, Citigroup, JPMorgan and Morgan Stanley have all agreed to the government’s offer of $2.25 billion, or 33 cents on the dollar, for the loans.
“We have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds,” the lenders who rejected the government offer said.
The holdout lenders -- who said their combined debt holding represents about $1 billion of the $6.9 billion owed to senior secured lenders – struck back at comments from an unnamed administration official this morning that blamed them for causing the imminent bankruptcy. The group said they had offered to accept 60 cents on the dollar, despite “long recognized legal and business principles” that gives senior lenders such as themselves the right to be repaid in full before others recover anything in bankruptcy court.
“Our offer has been flatly rejected or ignored,” the group said. “In its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.”
A group of about 20 firms who declined to go along with the 11-th hour deal struck by the Obama administration to save Chrsyler from bankruptcy, has just released a statement claiming that the deal was unfair.
The group, which does not identify who they are but sources said includes boutique firm Perella Weinberg, hedge fund Stairway Capital and asset manager OppenheimerFund, said they had been “systematically precluded” from engaging in direct negotiations with the government, which they said had been largely done by four large banks that own 70 percent of the $6.9 billion in loans. Goldman Sachs, Citigroup, JPMorgan and Morgan Stanley have all agreed to the government’s offer of $2.25 billion, or 33 cents on the dollar, for the loans.
“We have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds,” the lenders who rejected the government offer said.
The holdout lenders -- who said their combined debt holding represents about $1 billion of the $6.9 billion owed to senior secured lenders – struck back at comments from an unnamed administration official this morning that blamed them for causing the imminent bankruptcy. The group said they had offered to accept 60 cents on the dollar, despite “long recognized legal and business principles” that gives senior lenders such as themselves the right to be repaid in full before others recover anything in bankruptcy court.
“Our offer has been flatly rejected or ignored,” the group said. “In its earnest effort to ensure the survival of Chrysler and the well being of the company’s employees, the government has risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades.”