Supreme Court may Right the Chrysler Deal

Thanks go out to Supreme Court Justice Ruth Bader Ginsberg. She put the Chrysler bankruptcy deal on hold. This Obama administration brokered deal ignores established bankruptcy law and sets a poor precedent for businesses needing private investment. It offers a quid pro quo pay-off to the UAW through VEBA (55% owner post bankruptcy), more than coincidentally a large supporter of the Obama campaign. The Congress needs to take a serious look at the use of TARP money in the structure of this deal.

When secured creditors are dumped for political reasons, we all ultimately pay the costs. Bankruptcy is an orderly process for settling the affairs of a failed business, the order of claims needs to be maintained to allow businesses to borrow money for growth at reasonable rates. If secured creditors (in this case a pension fund loaning money to Chrysler) can be displaced by unsecured creditors (in this case the UAW) by bankruptcy courts then chaos will hurt US based businesses in favor of European Union based companies, where secured loans will have more real "security". This would make loaning money to Airbus safer than loaning money to Boeing, BMW and Daimler safer than Ford, etc.

There are many things wrong with the Chrysler deal, including the sudden dropping of dealers in May, which has "stolen" the future from many small dealerships without compensation and forced hundreds of small businesses into bankruptcy and employees into unemployment. Dealerships had their contracts surreptitiously broken and were left with soon to be worthless auto and parts inventories. You can read the raw deal given to 789 small businesses and their employees and communities. http://www.chryslerrestructuring.com/

Another thing wrong with the Chrysler deal is that customers of the "old" Chrysler will not be able to make claims for vehicle warranties or defects against the "new" Chrysler. They will instead be making a claim with a new, grossly underfunded rump Chrysler.
http://www.chryslerllc.com/en/news/

How can the Obama administration justify the deal from a public policy point of view? How can they favor the Chrysler management and unions who presided and gutted Chrysler as they collectively killed it over consumers, independent dealers and pension funds.

In the end, the brokers of destruction will be paid off handsomely. This snag may temporarily delay Robert L. Nardelli from moving on to his next victim. Mr. Nardelli, the current head of Chrysler, destroyed half of the stockholder value at Home Depot during a period of stock market growth before departing with over $100 million in pay-off money.

He was also the 1st runner-up to Jeffrey Immelt at General Electric, where Mr. Immelt also destroyed of GE stockholder equity during the 7 years before the market melt down. Jack Welch may have known how to run GE, but he did a poor job in lining up successors.