Chrysler Bankruptcy Hits Road Bump

Amid Lender Objections, Judge Delays Decision On Whether Automaker Can Start Transferring Assets

(AP)  A bankruptcy judge on Monday postponed his decision on whether Chrysler LLC can start the process of transferring its assets to a new entity partnered with Italian automaker Fiat.

Judge Arthur Gonzalez delayed the issue until Tuesday afternoon because Chrysler did not file its motion until late Sunday and people with objections need more time to review the deal.

A group of Chrysler's lenders have refused to wipe out most of Chrysler's debt and go along with the government's restructuring plan. A lawyer for some of the creditors, Tom Lauria, said they have not had time to review Chrysler's 300-page filing.

Lauria also objected to a Chrysler motion to allow the automaker to pay taxes, and he indicated that he also would object to the payment of other costs and expenses. He said if the sale to Fiat fails to go through, any money spent would be taking away from what left for the lenders later.

"We're opposing at this point everything that the debtor is doing that is premised on the assumption that value that would be preserved through the sale," he said. "Because if we didn't have the sale, none of these actions make sense.

"What we're doing is spending money today that we're going to have to fight to get back later."

Lauria, whose group includes lenders such as OppenheimerFunds Inc. and Stairway Capital Management, also said that some of the holdout lenders have asked to remain anonymous for now, citing fears about their safety.

"People in the group have received death threats that they believe to be bona fide and contacts with the police have been made," Lauria said.

Other issues set to be decided Monday include approval for Chrysler to start using $4.5 billion in government loans so it can keep operating under bankruptcy protection.

Chrysler, the nation's third-largest car manufacturer, filed for bankruptcy protection Thursday. The company plans to emerge in 30 to 60 days as a leaner company, with Fiat Group SpA potentially becoming the majority owner.

The biggest obstacle to the plan appears to be Chrysler's secured lenders who hold $6.9 billion of the company's debt.

Four banks holding 70 percent of the debt agreed to a deal that would give the lenders 29 cents on the dollar. But a collection of hedge funds refused to budge, saying the deal was unfair because they deserve to recover more than other creditors like the United Auto Workers.

President Barack Obama on Thursday chastised the funds for seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles, including the Fiat deal and a cost-cutting pact that the UAW ratified last week.

[danstyme]

hey america,maybe bob nadelli brought down chrysler like he did to home depot and ge i bet he still has a job or a hugh payout like from home depot,i own a dodge and have owned many imports ,i would never buy an american car again,i would rather buy a car made in america because guees what they still employ americans!!!!!!!!!!!!!!! american car co should have worked on alterative fuel in the 70s and this would not have happened and unions need to end!!!!!!!1 they suck the life out of people look at who runs them and how much money unions have!!!!!! we did this to ourselfs and now we need to go green or just go away !!!!!!!!!!!!!!

[studpuppet]

I have owned 2 dodge trucks and now have the chrysler 300 and have not had any problems with my vehicle's so maybe the people that say they have problems with thier chrysler auto's do not take care of thier routine maintenance! Sounds like the bashers of our domestic auto companies would rather have the foreign transplants here to serve America! Is China or Russia next to bring thier auto's here? Wake up America!!

[jbar116]

Why is it that so many large corporations are unwilling to part with a dollar these days. It's good for the economy to move money around isn't it? I think they, the banks and other large corporations, are aware that this financial crisis isn't over and we haven't come close to seeing the bottom yet. Hold on the ride isn't over.

[jkgreen2468]

the comment on fiat standing for .... fix it again tony ... is sad
ford.....fix or repair daily
Pontiac...poor old n**** think n its a Cadillac
gm c.....ghetto mobilization company

every maker has its detractors, if fiat is willing to bail out a failing company, why berate them, isn't that capitalism?

[oftencensord]

Fiction writers couldn't have come up with a loser plan this bad. We are supposed to believe FIAT, a car company who couldn't give away a car in America, is now going to be successful and save the once profitable Chrysler ! Is this Obama's way of extending more humiliation to Americans? This is unbelievably stupid. If the US Government is going to save a GM and Chrysler, go for broke and make the a Great American Car company and tell Fiat to kiss off!

[Walter_Plinge]

So when are you getting off the bus.....

Don't say eight years. Dems had basically the last two....

Yes reality will turn and bite you on the leg. Since your demeanor you are most likely sitting on your butt.

[impeachbhb]

This is nothing but Obama's political payback to the UAW.
This company is doomed to fail Will the last worker out please turn out the lights.

[Onfyre]

I bought 2 Chrysler cars, 1 in the 80's and 1 in 02. Both were worthless junk. Now they are Merging with another worthless company. Too many bad decisions, Too many bad cars....RIP Chrysler.

[cruzn66]

I love the conservative response to this...."Give Us Our Money Back!!!" when most of the money made was worthless paper to begin with! That's why the economy collapsed in the first place. hugh investor over speculation and tax evasion which blew open the value of everything. Now when the correction is occuring, they want to get their money back...
BOOO HOOOOO HOOOO!!
What about the thousands of Americans who are now suffering as a result of the greed of specualtors who may have made you alot of money at who's expense. Welcome to "reality bites". Nobody gets to ride for free any more so get used to it and stop blaming the Left for trying to clean up the mess that the Right made of America!!!
Republicans had eight years to get it right and still screwed up. Obama has had alittle over 100 days and you expect miracles. Why not just put the blame where it squarely belongs, individual GREED!

[mitdgreenb]

This is really quite simple: a contract is a contract. If you want to back out of a contract, the other party to the contract has a right to recover as much as he can. In this case, the Administration bullied the "4 banks with 70% of the debt" into accepting a small payout. How? Because those banks are ALREADY getting a taxpayer bailout via TARP. Threatening to take away TARP is a good way to force concessions. Props to the Administration.

But what of the others who leant money in good faith and are NOT getting a government bailout? They deserve either a higher payout than the "senior" banks... or government money. That would be fair. Enough of this populist cr&p and appeasing the union.

[omega39-2009]

Thanks to the Patriots who are fighting the washington socialists and their un-constitutional take-over of America's finance and industry.

True Americans will support their wonderful efforts!
Posted by StopTheLoonyLeft

You mean the greedy hedge fund managers that were in on destroying the worlds economy? You are such a tool!

[omega39-2009]

Thanks to the Patriots who are fighting the washington socialists and their un-constitutional take-over of America's finance and industry.

True Americans will support their wonderful efforts!
Posted by StopTheLoonyLeft

You mean the greedy hedge fund managers that were in on destroying the worlds economy? You are such a tool!

[Trust_me_]

I would go out of my way to buy a non Muslim Motor Car!

[Trust_me_]

Acorn said it was OK!

[duckandrun2009]

StopTheLoonyLeft - What make of car do YOU drive??? I'll bet it's a Toyota. If you were so interested in being an American patriot, then you should buy American. Unfortunately, our president just devalued about a third of the cars on the road. Try to trade in your Chrysler product now, or sell it privately. Made a HUGE mistake