Tag Archives: chrysler

Taleb: I Have Discovered The Solution To The Global Financial Crisis

The Business Insider – Nassim Taleb and his hedge-fund partner Mark Spitznagel weigh in in the FT with an analysis of the world’s problem (too much debt) and a reasonable solution (convert some of the debt to equity). 

As usual, Taleb lards up his argument with guru-speak and smug swipes at every other economist on the planet, which undermine the point.  But in this case, the point is a good one.

Converting debt to equity is what corporations do when they go bankrupt.  GM and Chrysler just did it, and the airlines will do it next time they go bust.  Same for the hundreds of other companies that go broke every year.

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Supreme Court approves the Chrysler-Fiat alliance

The Money Times – While the group of Indiana pension funds, holding $42 million debt in Chrysler, opposed the treatment meted out to them in the form of reorganization process with Fiat, the court denied hearing to the pension funds and upheld the decision of Chrysler- Fiat alliance.

While refusing the hearing to the pension funds, the Supreme Court issued a statement saying that the aggrieved parties must convince four out of nine judges that the matter is serious to warrants full appeal.

Indiana Treasurer Richard Mourdock, who led the cause of the pension funds, said that he was disappointed. “The United States government has, I continue to believe, acted egregiously by taking away the traditional rights held by secured creditors.”

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Hedge funds worried Obama moves could backfire

Reuters UK – U.S. government efforts to revive a sluggish economy have cheered markets since March, but some of the most successful investors around worry these moves may only make the bad times linger.

Several hedge fund managers at an investment conference this week warned that a number of policy moves by the Obama administration, from its Chrysler intervention to Treasury’s myriad bank bailouts, will only extend the recession.

It would be better, they said, if the government let markets move unimpeded, causing pain now but clearing a path for sustainable recovery.

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Fund Managers Burned by Obama Now Say They Are Wary

Bloomberg – Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

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New Group of Creditors Tries to Block Chrysler

Washington Post – The government-orchestrated sale of Chrysler to Italian carmaker Fiat is facing a fresh legal challenge from some of the American carmaker’s lenders, which are trying to take the fight to federal district court.

Pension funds representing Indiana teachers and police officers, and a state construction fund, filed Wednesday to have the Chrysler bankruptcy proceedings heard by the district court, which has authority over the bankruptcy court.

The funds contend that the automaker’s sale violates their rights as senior secured lenders to Chrysler, and that under the proposed sale, they would recover less than junior lenders. They also think the government does not have the authority to use federal rescue money designated for banks to bail out Chrysler.

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‘Hedge Fund Man’ for next president

Pottstown Mercury – I have seen the future of conservatism and … he is a hedge fund manager.

I refer to hedge fund manager Clifford S. Asness, and I’m only halfway kidding. Or maybe I’m not kidding at all. The fact is, Asness has launched the single most lucid and inspiring counter-attack against the Obama administration’s brazen assault on capitalism as seen in its Chrysler bankruptcy shakedown.


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Demonizing hedge-fund managers

St. George Daily Spectrum – According to the Center for Responsive Politics, hedge funds and private equity firms donated $2,992,456 to the Obama campaign in the 2008 cycle. Obama, vocal critic of the campaign finance practice known as "bundling," accepted more than $200,000 in bundled contributions from billionaire hedge-fund manager James Torrey, more than $100,000 in bundled contributions from billionaire hedge-fund manager Paul Tudor Jones and more than $50,000 in bundled contributions from billionaire hedge-fund manager Kenneth C. Griffin, chief executive officer of Citadel Investment Group in Chicago.

In an extraordinarily candid open letter to Obama, hedge-fund manager Cliff Asness defended his industry from the president’s "backwards and libelous" charges. "Managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the president, nor to oppose him, nor otherwise advance their political views," Asness wrote. He has oversight of some $20 billion at AQR Capital Management, LLC, which is not involved in the Chrysler case.

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Chrysler Opponents Unmasked

BusinessWeek  – The list of dissidents is much smaller than the original 20 or so hedge funds that veoted a pre-bankruptcy deal to reduce Chrysler’s outstanding secured debt. The list of hedge funds that are still members of the opposition group calling themselves Chrysler Non-Tarp Lenders is down to just six funds. In all, the funds control $295 million of Chrysler debt, a far cry from the nearly $1 billion the original group of 20 had controlled.

The dissidents included funds managed by Schultze Asset Management, Arrow Hedge Partners, Stairway Capital, OppenheimerFunds, Foxhill Capital Partners and Group G Partners. Early on, Stairway Capital and Oppenheimer had been identified as leaders of the Chrsyler holdouts, but the others funds had not.

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Hedge Funds Lose In Chrysler Bankruptcy

The Business Insider – It looks like the "surgical" 30-60 day bankruptcy may be a go.

Late last night, after a marathon session in court, Judge Arthur Gonzalez basically approved the plan to merge Chrysler into Fiat, rejecting the claims from the senior secured (though minority) bondholders.

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Chrysler Dissidents Must Reveal Identity, Judge Says

Philadelphia Bulletin – Chrysler LLC dissident lenders must reveal their identities by 10 a.m. today, a bankruptcy judge ruled, rejecting claims that their safety was at risk.

U.S. Bankruptcy Judge Arthur Gonzalez in New York forced the group to file a list of its members publicly, denying their request to reveal their identities only to the bankruptcy court. Judge Gonzalez said the lenders have no evidence that keeping their identities private would help protect them. The group seeks to block an auction of most company assets to an entity managed by Fiat SpA, an outcome Chrysler said would force it to liquidate, costing thousands of jobs.

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Hedge fund manager lashes back at Obama on Chrysler

Reuters – Prominent hedge fund manager Clifford Asness has struck back at the Obama administration, saying hedge funds had the right and responsibility to hold out on last week’s Chrysler LLC restructuring deal.

"Managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their political views," Asness, who oversees about $20 billion at AQR Capital Management, LLC wrote in an undated letter.

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Chrysler Hedge Funds Getting Death Threats

The Business Insider – Barack Obama’s decision to paint the hedge funds in the Chrysler case as anti-American obstructionists is prompting death threats against them.

That’s at least what their lead laywer Thomas Lauria is saying, reports The Detroit News. He said in court that the threats have been turned over to the FBI.

We assume Lauria is being honest — you don’t say this stuff in court and turn it over to the FBI if it’s rubbish — though we’ll note that Lauria is being pretty provocative in his attempt to win the war of public opinion in the Chrysler case. He’s of course been airing the complain that one redoubt, Parella Weinberg, only decided to go along with the Rattner plan upon receiving thuggish threats of intimidation.

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