Comments on: The case of the dissident Chrysler bondholders http://www.creditwritedowns.com/2009/05/the-case-of-the-dissident-chrysler-bondholders.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: rfreud http://www.creditwritedowns.com/2009/05/the-case-of-the-dissident-chrysler-bondholders.html#comment-56333 rfreud Sat, 02 May 2009 20:26:00 +0000 http://www.creditwritedowns.com/?p=8385#comment-56333 A 363 sale is an auction, a like a foreclosure sale. If the class of senior bondholders or rather a minority of them believes it can recover more in a liquidation than from a sale to the stalking horse bidder in a 363 sale, well then, they should overbid the FIAT-UAW-UST offer and get on with it. Their problem will be lining up the financing to pay for their bid. The US Treasury is the only game in town for that. A more serious and interesting question in all this is: What democratic process validates the UST decision to finance the FIAT-UAW combination? And also, is this kind of lending what the government rather than a bank, even a national or nationalized bank, ought to be doing? A 363 sale is an auction, a like a foreclosure sale. If the class of senior bondholders or rather a minority of them believes it can recover more in a liquidation than from a sale to the stalking horse bidder in a 363 sale, well then, they should overbid the FIAT-UAW-UST offer and get on with it. Their problem will be lining up the financing to pay for their bid. The US Treasury is the only game in town for that.

A more serious and interesting question in all this is: What democratic process validates the UST decision to finance the FIAT-UAW combination? And also, is this kind of lending what the government rather than a bank, even a national or nationalized bank, ought to be doing?

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