re: #467 quickjustice

Not exactly. In a Chapter 11 bankruptcy, management proposes a Chapter 11 plan for the bankruptcy corporation that strips away bad contracts, and restores the bankrupt to competitive status. Management in this case is the U.S. government. If management fails to propose a plan, creditors may do so.

Creditors get to vote on the plan. Senior secured creditors are in a voting category separate from junior unsecured creditors and unsecured creditors. What the lawyer said is that the U.S. government made loans to Chrysler without getting a priority position senior to that of the senior secured creditors. In short, thanks to Obama, the government is in a junior voting position, and is likely to lose at least part of its investment in Chrysler to the senior secured creditors. Smart work, guys!

Thanks for the clarification. The end results seems the same, though - it isn’t Chrysler’s decision where that money goes or who gets paid back anymore.

I wonder if this will hasten Geithner’s departure. He’s certainly been locked in a closet for the last couple of weeks. It isn’t like there wasn’t precedent for how to manage this - it’s the second time that Chrysler has taken government money, and the first time around things were very well controlled and understood right from the get-go. This time, it’s been like watching a whole flock of suddenly headless chickens rampaging through their coop.