Chrysler gone?

[GRG55]

Re: Chrysler gone?

Two words:

capital flight.

Indeed!

But let's look on the bright side...that Hemi-powered Fiat Punta that Lukester's lusted after all his life is one step closer to reality. Could be the first car that Fiat produces that gets you where you want to go before the body rusts away...

[WildspitzE]

Re: Chrysler gone?

Two words:

capital flight.

Guess nobody wants to hit the bid on all those GM debt holders trying to make their way out the door. Wonder how this will affect F.

In the future, bond holders need to really price this incident into the cost of debt of any company that has a UAW or UAW-type entities as they may be forced to acquiesce under this sort of political duress and take losses.

Bond vigilantes of another kind.

[Fiat Currency]

Re: Chrysler gone?

Well there goes another asset class (Corporate Bonds) that I will NOT be investing in ... :mad:

If this keeps up, pretty soon I'll have to be like jtabeb and go "all-in" on precious metals.

[WildspitzE]

Re: Chrysler gone?

The Administration has just killed all chances of ending this recession. The clear signal sent is that the rule of law no longer applies. Fiat Currency is right you can not even buy senior secured debt anymore.:eek: The precedent is set every Bankruptcy Attorney looking to cram down secured lenders will now be able to site case law Chrysler. Also the real disturbing precedent is the secured creditors had a valuation showing that liquidation value of Chrysler would have netted them 70% on their claim. The Judge would not even allow them to present testimony on the report. The entire structure of bankruptcy is based upon priority and the secured creditors leverage is conversion to 7 liquidation. Now you cannot count on Judges allowing liquidation value to come into hearings. Once again precedent has been set.:mad:

On the flip side, I wonder if this will increase the demand of bankruptcy remote structures that involve "true sales" (ie securitization) --- now that secured lending = clean/unsecured senior lending.

If anybody has the ability to show what's happening in the market overall between senior secured and unsecured spreads in general, that would be an interesting data point.

[GRG55]

Re: Chrysler gone?

Well there goes another asset class (Corporate Bonds) that I will NOT be investing in ... :mad:

If this keeps up, pretty soon I'll have to be like jtabeb and go "all-in" on precious metals.

Well there's still developing nation sovereign debt to speculate in...

Venezuela Bonds Tumble as Chavez to Seize Oil Assets

May 8 (Bloomberg) -- Venezuela’s benchmark bonds fell the most in three months after President Hugo Chavez said he will begin seizing assets from oilfield services companies immediately, using a law the national assembly passed yesterday...

...Chavez didn’t provide names of companies whose assets he said last night would be “liberated” today. Schlumberger Ltd. and Halliburton Co., the world’s biggest and second-biggest oilfield services companies, both operate in Venezuela...

...The yield on Venezuela’s 9.25 percent bonds maturing in 2027 surged 65 basis points, or 0.65 percentage point, to 14.68 percent at 11:15 a.m. in New York, according to JPMorgan Chase & Co. The bond’s price fell 3 cents on the dollar, the most since Jan. 29, to 65.75 cents...

Can't understand why the bonds sold off when the government now owns all these additional assets they didn't have just last week...:rolleyes:

[ricket]

Re: Chrysler gone?

Well there's still developing nation sovereign debt to speculate in...Can't understand why the bonds sold off when the government now owns all these additional assets they didn't have just last week...:rolleyes:

I actually think that seizing assets from multi-national corporations (i.e. Haliburton) who's only mission is to pillage and decimate the economies of other countries for their own monetary gain is a good start. It's sort of like breaking up monopolies (ie foreign entities) on goods that should only belong to the people (ie Venezuela). If they want it incompetently run by Chavez and have high oil prices, that's their right to decide and no one else.

[WildspitzE]

Re: Chrysler gone?

I am also closely following the General Growth Bankruptcy. This is directly related to your bankruptcy remote question. They GGP are trying to set another precedent in bankruptcy. They filed the Parent company and all of the LLC's which are single purpose entities that hold the specific asset that the securitized lenders lent on. They are trying to combine all of the single purpose LLC's into the larger bankruptcy. This would lump all of the good assets with the bad assets allowing them to take liquidity from the good assets stabilize the debt on the bad assets. This would really shatter the securitization market because they require the single purpose LLC's to prevent this from happening IMHO. Attached is a document submitted to the court by the mortgage bankers association describing in detail the securitization process and the potential ramifications on the GGP filing.

Interesting. I was confused by the 'they' in your post.

Did you mean that the LLCs (GGP) themselves filed for bankruptcy?

Or, by 'they' do you mean GGP's creditors? Meaning, GGP's creditors filed against GGP and all of the SPVs?

Obviously, the first is of greater concern.

If the assets are ultimately consolidated into the estate, then it would definitely affect all existing transactions that are structured in the same way (more complex than just the fact they're LLCs). I'm sure that lawyers would be happy, as they would be flooded with an unbelievable amount of restructuring and amendment work. For future transactions, the risk would be structured around through the use of different vehicles, or different provisions within the vehicles, or a combination thereof.

Alternatively, if it's simply a matter that they were not properly structured within the existing rules (as most stuff these days is, it's terrifying when you actually see the holes in the structures -- mostly credit holes), then the properly structured trades should begin to differentiate themselves.

That said, this sort if thing has happened before, where a court ruling basically causes a change in the rules to structure within.

Will check out the doc when I can get a hold of a printer to print it out. Thanks again.

[cjppjc]

Re: Chrysler gone?

The Administration has just killed all chances of ending this recession. The clear signal sent is that the rule of law no longer applies. Fiat Currency is right you can not even buy senior secured debt anymore.:eek: The precedent is set every Bankruptcy Attorney looking to cram down secured lenders will now be able to site case law Chrysler. Also the real disturbing precedent is the secured creditors had a valuation showing that liquidation value of Chrysler would have netted them 70% on their claim. The Judge would not even allow them to present testimony on the report. The entire structure of bankruptcy is based upon priority and the secured creditors leverage is conversion to 7 liquidation. Now you cannot count on Judges allowing liquidation value to come into hearings. Once again precedent has been set.:mad:

Not to put too fine a point on it, but has "case law" been made? The "dissident group" has agreed to except less. Did I miss something? What judge would not allow them to present testimony?

[GRG55]

Re: Chrysler gone?

I actually think that seizing assets from multi-national corporations (i.e. Haliburton) who's only mission is to pillage and decimate the economies of other countries for their own monetary gain is a good start. It's sort of like breaking up monopolies (ie foreign entities) on goods that should only belong to the people (ie Venezuela). If they want it incompetently run by Chavez and have high oil prices, that's their right to decide and no one else.

Best laugh I had today...

If you want to see what's going to happen next take a visit to any of the sub-Saharan African countries where China is actively extracting natural resources.

I suppose it's also the right of the citizens of the USA to decide to abrogate the rights of Chrysler's senior secured debt holders too. But that doesn't mean there can't be unintended or unanticipated negative consequences...perhaps long term...in both instances.

[WildspitzE]

Re: Chrysler gone?

Case law has been made. Secured Creditors who lent with the assurance they would get paid 100% before anyone were crammed down and the Priority Unsecured Creditor (UAW) got more then them. Trust me every bankruptcy lawyer representing priority unsecured lenders will be referring to Chrysler to confirm their plan over the secured creditors. The dissident group had no chance they knew from the public lashing and the Judges immediate granting of the DIP financing and 363 sale their objections would not be heard. The Judges Bio is attached.

http://www.nysb.uscourts.gov/judges/ajg.html

It's important to note though, that secured lending and securitization are different in a material respect. A securitization is structured so that an interposed special purpose vehicle (SPV) legally owns a pool of assets. Thus, the owners of the bonds that the SPV issued have an ownership interest in the assets. Under a secured lending transaction, the debt holders only have a security interest in the assets of the trust.

[cjppjc]

Re: Chrysler gone?

Case law has been made. Secured Creditors who lent with the assurance they would get paid 100% before anyone were crammed down and the Priority Unsecured Creditor (UAW) got more then them. Trust me every bankruptcy lawyer representing priority unsecured lenders will be referring to Chrysler to confirm their plan over the secured creditors. The dissident group had no chance they knew from the public lashing and the Judges immediate granting of the DIP financing and 363 sale their objections would not be heard. The Judges Bio is attached.

http://www.nysb.uscourts.gov/judges/ajg.html

I see. You are probably right. I did not know any judge had written any decision with regards to the Chrysler creditors. Thank you for informing me.

[cjppjc]

Re: Chrysler gone?

http://online.wsj.com/article/SB124217356836613091.html

Good article regarding the effect of the recent CHrysler bankruptcy.

That was a good article. Thank you.

[ax]

Re: Chrysler gone?

This won't save many jobs either:

General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.

http://news.moneycentral.msn.com/pro...513&id=9900614

[cjppjc]

Re: Chrysler gone?

This won't save many jobs either:

General Motors Corp and Chrysler aim to drop as many as 3,000 U.S. dealers and are expected to begin sending notifications as early as Thursday, three people briefed on the still developing plans said.

http://news.moneycentral.msn.com/pro...513&id=9900614

Maybe this is a stupid question. How does closing dealership SAVE money? Aren't the dealership like franchises? Or is this just a way to lessen competition at the retail level so prices can be raised in the future?

[ThePythonicCow]

Re: Chrysler gone?

How does closing dealership SAVE money?

I presume that the auto manufacturers (GM, Ford, ...) provide much of the financing for the dealers. The dealers might not have been ordered to close, but they might have been told that the manufacturers would no longer fund their "floorplan" (cars on the floor ready to sell.)

See for example Credit crunch: Auto dealerships struggle, close as ‘floorplan’ financing dries up.