"The difference with GM is that, whereas the 'bad guys' in Chrysler were hedge funds, who Obama called 'speculators,' here they're Main Street -- individual retirees who bought bonds when they were like gold bullion," said Thomas Lauria, a lawyer with White & Case LLP who represents Chrysler lenders fighting that company's U.S. backed reorganization. Lauria said he agreed Friday to also represent GM's dissenting bondholders in any bankruptcy of that company.
In the Chrysler case, the dissident debt holders disbanded 10 days after the company collapsed, citing political pressure that began when President Barack Obama criticized the group. Evan Flaschen, chairman of the restructuring department at law firm Bracewell & Giuliani LLP, said uncooperative GM bondholders may be less politically vulnerable.
"The story that hasn't been told is, this isn't GM's union retirees versus the bondholders. It's retirees versus other retirees," said Flaschen, who isn't involved in the GM matter. While Chrysler's dissidents lost steam because they were forced to identify themselves and faced public stigma, including alleged death threats, GM's opponents may be harder to criticize, Flaschen said.
GM Chief Executive Officer Fritz Henderson has said the U.S. Treasury allowed the automaker very little flexibility in its negotiations with bondholders. Julie Gibson, a spokeswoman for GM, declined to comment. "We're stuck, we need the white knight," said Gary Thomas, a retired auto mechanic and GM bondholder. "I'm not asking for special treatment, I'm just asking for parity. I just feel like whatever the UAW gets, the bondholders should get."
In the Chrysler case, the dissident debt holders disbanded 10 days after the company collapsed, citing political pressure that began when President Barack Obama criticized the group. Evan Flaschen, chairman of the restructuring department at law firm Bracewell & Giuliani LLP, said uncooperative GM bondholders may be less politically vulnerable.
"The story that hasn't been told is, this isn't GM's union retirees versus the bondholders. It's retirees versus other retirees," said Flaschen, who isn't involved in the GM matter. While Chrysler's dissidents lost steam because they were forced to identify themselves and faced public stigma, including alleged death threats, GM's opponents may be harder to criticize, Flaschen said.
GM Chief Executive Officer Fritz Henderson has said the U.S. Treasury allowed the automaker very little flexibility in its negotiations with bondholders. Julie Gibson, a spokeswoman for GM, declined to comment. "We're stuck, we need the white knight," said Gary Thomas, a retired auto mechanic and GM bondholder. "I'm not asking for special treatment, I'm just asking for parity. I just feel like whatever the UAW gets, the bondholders should get."
Thomas said he has joined a group of individual creditors called GM Bondholders Unite that Lauria agreed Friday to represent. The group is trying to gather investors to get "fair and equitable treatment" in a bankruptcy, according to its Web site. http://gmbondholdersunite.com/
See the entire Article at: http://www.delawareonline.com/article/20090531/BUSINESS/905310329/1003/Some+GM+bondholders+agree+to+equity+deal+to+rescue+company
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"Initially, the company said getting bondholders to agree to a debt swap was its best chance for avoiding Chapter 11. But the latest plan is designed to expedite a bankruptcy filling more than to avoid it. As part of the agreement, bondholders pledged not to oppose GM's reorganization in court.
"Initially, the company said getting bondholders to agree to a debt swap was its best chance for avoiding Chapter 11. But the latest plan is designed to expedite a bankruptcy filling more than to avoid it. As part of the agreement, bondholders pledged not to oppose GM's reorganization in court.
Although the committee supported the deal, a group of dissident bondholders represented by Thomas Lauria, a lawyer for holdouts in the Chrysler case, fought against it. They argued small, individual bondholders were left with no voice as the U.S. Treasury negotiated directly with GM's large institutional bondholders.
Since it was reported that 54% of the institutional investors agreed to the paltry offer by GM, was this 54% of the total $27 Billion bond debt or 54% of the $22 Billion institutional bond debt? Fortunately the 46% who did not agree to the offer reserved their rights to oppose the GM/governments actions with legal challenges in bankruptcy court. Let the games begin.
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