Defiant small GM bondholders vow to carry on the fight

Defiant small GM bondholders vow to carry on the fight
By Nicole Bullock
Published: June 27 2009 03:00 Last updated: June 27 2009 03:00

This weekend, Oliver Addison Parker will board a plane from Fort Lauderdale to New York. Mr Parker, a trial lawyer and General Motors bondholder, is en route to hearings on the company's restructuring to argue his case himself in federal bankruptcy court.

An unofficial committee of family and dissident bondholders lost a bid this week to gain official status as a separate committee, which would have meant the estate paid the legal fees. The group intends to contest the sale separately.

The issue highlights the difficulty individual bondholders face when competing against larger, better connected groups. Top lawyers for GM and the unsecured creditors' committee charge rates of more than $900 an hour.

The high fees and the difficulty of mobilising opposition mean that individuals, including the dealers, have gained publicity and sympathy on Capitol Hill but not so much in bankruptcy court.

A survey by the unofficial committee of family and dissident bondholders of its group showed 86 per cent of respondents bought their bonds between 80 and 100 cents on the dollar. Many are retirees who stand to lose much of their savings.

The small bondholders, undaunted, intend to continue their challenge. The unofficial committee has been gathering donations through a website to pay legal costs. Michael Richman of Patton Boggs is representing them. They will argue that the fast-track sale is unjustified and push for a traditional Chapter 11 reorganisation, which they believe will give them more balanced treatment with the unions.

"We have enough to fund [the case] through our objections and we are working on funding it beyond that," says Mark Modica, a manager at a Saturn dealership. "We're still in a fight."

http://www.ft.com/cms/s/0/48980682-6326-11de-b803-00144feabdc0.html