Lets talk about precedents...

[PETA]

Originally Posted by david austin

Cause a pretty damn big one was just made.

Not sure if any of you have been following the Indiana State Pension fund arguments against the Chrysler sale and use of TARP funds but this little nugget was said today by the Obama admin

"The Obama Administration argued Monday that no court, including the Supreme Court, has the authority to hear a challenge by Indiana benefit plans to the role the U.S. Treasury played in the Chrysler rescue, including the use of “bailout” (TARP) funds. The Indiana debt holders, U.S. Solicitor General Elena Kagan wrote, simply have no right to raise that issue, thus putting it out of the reach of the courts.

Although arguing that the courts may not rule on the validity of Treasury’s decision to shore up a new Chrysler company with funds from the Troubled Assets Relief Program, the Solicitor General did argue that those funds may go to a troubled auto company, and not just to banks or other regular financial institutions."

Sooooo... not even the highest court gets to decide how and where the treasury and Obama burn our cash.

SWEET!

Oh how this will greatly affect the future investment in America.

I think he may have assserted a lack of standing to sue... not terribly certain from the quote though but kinda sounded that way.

Originally Posted by joel

what was their reason for why the supreme court can't hear the challenge?

and can you understand, objectively, their reasons for stating that?

SCOTUS has original jurisdiction on a very small number of issues.. otherwise SCOTUS only hears the cases it wants to hear. It is the rare party that has the right to demand that they hear their case.

[david austin]

Xian has it right but its the larger issue at hand that worries me.

Govt : I know you bought into this company for 100$. If they fall on hard times then will you agree to take 1$ (for the good of humanity and all) and go quietly into the night.

Lender : No... I will let the courts decide what par bond value is through an assumed liquidation hearing where multiple parties submit their scenarios and I will accept my loss at what is deemed appropriate through due process.

Govt : Too bad that's not your choice since we essentially forced TARP money down their throats... Now its our call.

Lender : You can't use TARP money for that. There's no legal basis.

Govt : Uhhh... Well... Yes we can.


Joel. What I am getting at is the govt is changing the game every new inning. Keep in mind that this pension fund isn't some fat cat banker holding bin. These are regular middle America workers who are going to basically lose everything without even the chance to argue their fair value. Why? Because the govt wants a 'surgical' bk on its own terms. The main basis is that not only is TARP usage improper in this case, but also the Absolute Priority is, in fact, abrogated. But that is what a court venue is for - to objectively voice various opinions with a fair chance of getting heard after the opportunity to prepare their case.

The only reason it has gone up this high is because every other request has oddly been completely and absolutely denied.


And getting back to my larger point... This has ramifications to destroy any credibility towards the nature of investment in general. Why? Because it is of the opinion of the govt thus far that they will call the shots under essential absolution when the going gets rough and I dont know of any form of party or government that won't swing the pendulum towards their liking - again... what a court is for.

[PETA]

Originally Posted by david austin

And getting back to my larger point... This has ramifications to destroy any credibility towards the nature of investment in general. Why? Because it is of the opinion of the govt thus far that they will call the shots under essential absolution when the going gets rough and I dont know of any form of party or government that won't swing the pendulum towards their liking - again... what a court is for.

This repeated problem has a shit ton of capital just waiting on the side lines because the gov't has made the markets so uncertain that it's safer to stuff one's mattress.

Anyway, if a corporation wants to fight the issue they can. Whether the courts share Obama's opinion is up to the courts.

Now, if the corporations accept his bullying then that's their own problem.

[david austin]

Originally Posted by St. Stalin the Apathetic

This repeated problem has a shit ton of capital just waiting on the side lines because the gov't has made the markets so uncertain that it's safer to stuff one's mattress.

Anyway, if a corporation wants to fight the issue they can. Whether the courts share Obama's opinion is up to the courts.

Now, if the corporations accept his bullying then that's their own problem.

There was a rather large creditor case that was brought up the day Chrysler officially filed. Is it a coincidence that the day after the case was filed that half of the creditors backed out... I doubt it. The company itself wants the go through a bk as fast as possible for obvious reasons but in this case (as in many as you know) its the creditors who are at the heart of the issue.

Also... my point about 'absolute priority'

These creditors (aside from the Indiana holdouts aka... the only ones willing to keep fighting) were told 30 cents on the dollar. These are senior SECURED creditors who are lawfully entitled to first priority payment.

Why is it that the junior UNSECURED creditors getting 50 cents on the dollar.

That couldn't have anything to do with them being 'the union' would it?


Now lets take a step back and look at GM. How eager is new money to come into a situation where the govt would easily favor a potentially politically motivated union over the holder of the secured cash itself?

Now lets picture this in any scenario.

[PETA]

Originally Posted by david austin

There was a rather large creditor case that was brought up the day Chrysler officially filed. Is it a coincidence that the day after the case was filed that half of the creditors backed out... I doubt it. The company itself wants the go through a bk as fast as possible for obvious reasons but in this case (as in many as you know) its the creditors who are at the heart of the issue.

Also... my point about 'absolute priority'

These creditors (aside from the Indiana holdouts aka... the only ones willing to keep fighting) were told 30 cents on the dollar. These are senior SECURED creditors who are lawfully entitled to first priority payment.

Why is it that the junior UNSECURED creditors getting 50 cents on the dollar.

That couldn't have anything to do with them being 'the union' would it?


Now lets take a step back and look at GM. How eager is new money to come into a situation where the govt would easily favor a potentially politically motivated union over the holder of the secured cash itself?

Now lets picture this in any scenario.

not following entirely...

secured creditors are entitled to a payment equal to the value of their collateral... any deficiency is pari passu w/the claims of general unsecured creditors (i.e., trade creditors and holders of unsecured bonds)... blah blah blah

shoot me the specific facts at issue and I can answer more specifically...

and, afaik, there's no such thing as "junior" unsecured creditors. Priority has its order for secured creditors but unsecured creditors all fall into the same class iirc.

____________________

Originally Posted by david austin

SWEET!

Oh how this will greatly affect the future investment in America.

on rereading... I think a challenge would fail for standing and ripeness.

Its certainly not ready for SCOTUS... there's a lot of procedural steps required before they'd hear the case.

Further, the executive branch has been given these funds to spend according to the terms of the legislation. How they spend those funds is up to Treasury. I do not believe that any right exists from a recipient of federal funds to demand that a court determine how/where/where and how much of those funds will be spent.

From the little I know the administration would seem to be right... for better or worse.


perhaps I'm just not following specifically what right you feel is being abused... wisdom is a wholely distinct issue and I've found it in rare supply in the administration's handling of the economy.

[name change request]

you're explanation makes sense...

what i'm asking though is why is the Obama administration doing this? there has to be a reasonable explanation. you've given me your interpretation and opinions on it... let me know what the Obama administration's reason is in their POV.

[david austin]

Originally Posted by joel

you're explanation makes sense...

what i'm asking though is why is the Obama administration doing this? there has to be a reasonable explanation. you've given me your interpretation and opinions on it... let me know what the Obama administration's reason is in their POV.

Can't help you there because its going to be biased to you based on the facts that are out there.

I'm sure their are blogs and articles dealing with such though.

[david austin]

Originally Posted by St. Stalin the Apathetic

not following entirely...

secured creditors are entitled to a payment equal to the value of their collateral... any deficiency is pari passu w/the claims of general unsecured creditors (i.e., trade creditors and holders of unsecured bonds)... blah blah blah

shoot me the specific facts at issue and I can answer more specifically...

and, afaik, there's no such thing as "junior" unsecured creditors. Priority has its order for secured creditors but unsecured creditors all fall into the same class iirc.

'Junior' must be how they are tagging the representation of being below the senior lenders. Point still remains that they are unsecured lenders that are getting a sweetheart deal while senior contracts are being ripped apart

____________________

on rereading... I think a challenge would fail for standing and ripeness.

Its certainly not ready for SCOTUS... there's a lot of procedural steps required before they'd hear the case.

Further, the executive branch has been given these funds to spend according to the terms of the legislation. How they spend those funds is up to Treasury. I do not believe that any right exists from a recipient of federal funds to demand that a court determine how/where/where and how much of those funds will be spent.

From the little I know the administration would seem to be right... for better or worse.


perhaps I'm just not following specifically what right you feel is being abused... wisdom is a wholely distinct issue and I've found it in rare supply in the administration's handling of the economy.

Yes, the funds case against the sale doesn't really have much of a stance.

They are trying to block the sale to force a decision on the use/misuse of TARP funds that can further open the door to strong arming tactics and hush hush/rush rush bk filings that would sneak by without notice or a fight.

You are absolutely correct about the legislation giving the execs the power to spend the money. How it can be spent is much more cloudy. But lets not talk about that... lets get this bk done while everyone is still looking the other way.

Which leads to IMO a horrible precedent that has great ramifications on not only our next 363 bk... but for the potential for any company going through this step and then how new money will potentially back away from lending based on this type of action.

What good is a contract these days? Not even the courts know.

[Deff Gordon]

i wish i was safe from all my bad investments.

[PETA]

Originally Posted by david austin

'Junior' must be how they are tagging the representation of being below the senior lenders. Point still remains that they are unsecured lenders that are getting a sweetheart deal while senior contracts are being ripped apart

My point was that there is no priority amongst unsecured creditors. If they receive anything in a bankruptcy its often a result of wheeling and dealing.

Senior and junior contracts? When you say contract do you mean loan or other contract?

I'm not at all familiar with the facts so I'm just relating general bankruptcy info here. Bankruptcy is a court of equity not a court of law. Equity = that thing which left undone shoud be done... translation = the court tries to work out what it thinks to be the fairest deal given constraints it must apply.

Originally Posted by david austin

Yes, the funds case against the sale doesn't really have much of a stance.

They are trying to block the sale to force a decision on the use/misuse of TARP funds that can further open the door to strong arming tactics and hush hush/rush rush bk filings that would sneak by without notice or a fight.

You are absolutely correct about the legislation giving the execs the power to spend the money. How it can be spent is much more cloudy. But lets not talk about that... lets get this bk done while everyone is still looking the other way.

Which leads to IMO a horrible precedent that has great ramifications on not only our next 363 bk... but for the potential for any company going through this step and then how new money will potentially back away from lending based on this type of action.

What good is a contract these days? Not even the courts know.

Ah, I think of the word "precedent" as a term of art. You were using it in a more general sense. And yes, many of Obama's moves appear to have destabilized the sanctity of contract and it has forced a lot of smart money out of the market that might otherwise be looking at these troubled companies.

[Dionysos]

Originally Posted by Deff Gordon

supreme court blocked the sale to FIAT.

http://news.yahoo.com/s/ap/20090608/...court_chrysler

They put it back on track today:
http://news.yahoo.com/s/ap/us_supreme_court_chrysler

[Dionysos]

Originally Posted by david austin

The funds, it added, cannot show that four Justices will vote to hear their challenge on the TARP issue, which involves an issue of how to interpret the federal economic recovery law — an issue that neither the bankruptcy court nor the Second Circuit ruled upon because of the funds’ lack of standing If that is so, Kagan wrote, “no federal court has jurisdiction to decide the merits of the challenge.” Moreover, she said, the law is only eight months old, and has not been interpreted by any federal court, so that, too, would indicate it is not ready for the Supreme Court’s attention.

Easier read by... 'Stay out of the Obama juggernaut way'

To me that reads: Go through the system, we're not looking at it until a federal court makes a ruling.

/.02

[PETA]

" the Obama administration stressed in response that Chrysler was losing $100 million a day"

that used to seem like a lot of money.....

at $100,000,000.00/day it'd take 3 years to equal roughly half of Obama's projected budget deficit...

Originally Posted by Dionysos

To me that reads: Go through the system, we're not looking at it until a federal court makes a ruling.

/.02

yup... the wheels of justice grind slowly... but finely

[Dionysos]

Originally Posted by St. Stalin the Apathetic

yup... the wheels of justice grind slowly... but finely

So you're saying it's not an activist judge conspiring to make Obama into a demi-god? You are so off DA's Xmas card list.

[PETA]

Originally Posted by Dionysos

So you're saying it's not an activist judge conspiring to make Obama into a demi-god? You are so off DA's Xmas card list.

haha - just saying there's a process to these things

I still have no clue what the specific facts are that have him pissed... I think the charge is that the secured creditors were fucked and the unsecured creditors weren't... but no clue specifically how/what/when etc.