Bailout Watch 376: Uncle Sam Prepares for Chrysler, GM C11
Bloomberg reports that the U.S. government has retained white-shoe NYC law firm Cadwalader, Wickersham & Taft to advise the taxpayers’ reps on GM’s restructuring and possible debtor-in-possession financing. The Dickensian-sounding law firm joins Chicago’s Sonnenschein, Nath & Rosenthal (with newly acquired structure finance experts Thacher, Proffitt & Wood) and investment bankers Rothschild (which advised Delphi and gives Buickman conspiracy conniptions) in taxpayer-financed retainer heaven. The troika’s job: get Uncle Sam’s arms around the mess President Bush created by lending money to these failing, futile companies. And here’s the [overused metaphor alert] kicker: the U.S. government failed to get an inter-creditor agreement with the existing lenders done prior to the funding. So, when it all blows up, taxpayers’ claims on Chrysler and GM’s collateral are open to “debate.”
Cadwalder brings specific knowledge of debtor-in-possession (DIP) financing—particularly in terms of representing lenders. That’s you! Especially when it becomes obvious that there are no viable out-of-court restructuring scenarios for GM or Chrysler.
So, the stage is now set. Twelve days to go before the Chrysler and GM trundle back to D.C. for an ass-whooping. If Uncle Sam pulls the plug, don’t say we didn’t warn you. And he doesn’t, ditto.
More by Ken Elias
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Considering some of the recent "revelations" concerning our politicians and their so-called "participation" in the taxation system I humbly suggest that until every member of the House and Senate, and the President demonstrates that they are current on their taxes they not be allowed to spend any more of ours. "Taxation without representation" is one thing, I wonder how much "representation without taxation" we have. Bunter
On the issue of warranties of a bankrupt GM, I think the pieces that are left, say chevy and cadillac will have dealers. Being GM dealers from the past will be able to fix other GM products and bill the warranty to uncle sam or whoever is appointed to pick up the tab. It would only be in the even of a complete collapse of GM that independent garages would try and do the warranty work. I also believe, the longer GM waits to restructure and truly downsize their menagerie of auto brands, the more likely they will be too damaged to make a come back.
When oh when will GM/Chrysler file - please stop the madness of bailout - they are BANKRUPT- This country will survive without them -
Whether or not C11 will be allowed this go-around, I'm madder than hell that no intercreditor agreement was recorded prior to issuing the "loans." It's beyond irresponsible. Why we keep reelecting politicians who allow or facilitate such negligent and borderline criminal activity is beyond me.