On Fri, May 1, 2009 at 6:52 PM, David B. Shemano <dshem...@pwkllp.com>wrote:
> >> Two points. First of all, can you explain exactly how the Chrysler > >> workers are being bailed out here? Or are we debating a purely > >> hypothetical scenario? > > They are being bailed out. Chrysler is broke. In chapter 11, Chrysler > could "reject" the retirement and health obligations, leaving the plans with > essentially worthless claims. Instead, the obligations, as modified > pursuant to the plan, are being assumed by "New Chrysler," which is almost > entirely financed by the US government. > Are you suggesting that under a "normal" bankruptcy resolution, the Chrysler workers would get NOTHING? Has that ever happened in any real-life bankruptcy case? Please remember, the workers are already making substantial concessions under the Obama plan. You need to explain more clearly why you think these concessions are not large enough. Remember the idea here is to achieve a bankruptcy-like reorganization without a potentially risky declaration of bankruptcy. What in your opinion would be the outcome of a hypothetical "normal" Chrysler bankruptcy? To greatly simplify, as far as the bankruptcy system is concerned, unsecured > claims are unsecured claims and should be treated pro rata. That being > said, as I have explained several times on this list, worker and union > claims are uniquely favored under the bankruptcy code and have special > protections. In fact, it is not uncommon for such obligations to be assumed > by buyers of assets. However, from a bankruptcy conceptual perspective, > claims are claims. > Aren't you contradicting yourself here by saying on the one hand that "worker claims are uniquely favored" and on the other hand that "claims are claims" without regard to who the creditor is? -raghu. -- "I have the heart of a child... in a jar on my desk." - Stephen King
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