Our team over at GMInsideNews is reporting that the judge overseeing the Chrysler bankruptcy proceedings has thrown out the arguments made by the hold-out bondholders. By removing the only objection to the process, the bankruptcy proceedings can now be fast-tracked and the Fiat merger can go ahead.
During President Obama’s press conference last week, when he announced that Chrysler would file for Chapter 11, it was made clear that the proceedings would be quick. Obama also spoke out against the group of bondholders who refused to accept the government’s cash-for-debt deal that would see the companies receive just a third of what they have lent Chrysler.
The group of bondholders, comprised of several hedge funds that hold just 10 percent of Chrysler’s debt, made the argument that as the major bondholders who had agreed to the government’s deal (including J.P. Morgan) had accepted bailout funds from the government, they should be excluded from the process.
That argument was reportedly thrown out this morning in what must be record time for a bankruptcy case. Yesterday Judge Arthur Gonzales sped up the process by threatening that the unnamed debt holders had to reveal themselves publicly – something they were uncomfortable doing as may had complained of death threats.
The next part of the process will be the sale of assets, which has essentially already been outlined by the parties involved in order to expedite the process. It is expected that the U.S. government will purchase the majority of the assets in order to set up the New Chrysler – which is reported to be called Chrysler Acquisition Corporation.
With the major objectors removed from the process, Chrysler could be out of bankruptcy court by the end of the month!
Apparently President Obama was not bluffing when he said the Chapter 11 proceedings would be “quick and surgical.” That seemed unlikely considering the parties involved and the how the legal system works, but President Obama and the legislative branch seem to have a willing partner in the Judicial branch and Judge Gonzales.