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Friday, May 08, 2009

Chrysler: Only Three Holdout Creditors Remain

by Calculated Risk on 5/08/2009 11:19:00 AM

Update: from Bloomberg: Chrysler’s Dissenting Lenders Give Up Fight Over Sale

Chrysler LLC’s secured lenders that opposed the automaker’s bankruptcy sale of assets to a company run by Fiat SpA are dropping their fight in the bankruptcy court case ...

The group, calling itself Chrysler’s Non-TARP lenders, doesn’t plan to defend earlier objections and may withdraw them formally, said Tom Lauria, the White & Case attorney representing the group.
From Alan Ross Sorkin at the NY Times: 2 Funds Withdraw from Dissident Chrysler Group
OppenheimerFunds and Stairway Capital Management said on Friday that they were withdrawing from a group of dissident Chrysler creditors, days after it suffered a series of defeats in federal bankruptcy court...

Stairway also cited the shrinking roster of the dissident creditors as a reason to publicly withdraw its opposition to the Chrysler reorganization plan. “The fact simply is, however, our group has become too small to have a voice within the bankruptcy,” the firm said in its own statement.
At the outset last week, the group claimed about 20 members holding $1 billion in debt. When lawyers for the group filed a motion to disclose its membership under court seal, they said that the group held about $300 million.
Now only three creditors remain.

Sorkin has statements from Oppenheimer and Stairway. Here is an excerpt:
OppenheimerFunds has determined that the senior creditors can no longer reasonably expect to increase the recovery rate on the debt they hold by opposing the Taskforce’s restructuring plan.
It looks like the government's restructuring plan will prevail.