When Chrysler was forced to declare bankruptcy last week, a group of 20 creditors released a statement proclaiming their objections. After a New York bankruptcy judge forced the group to publicly identify its members, two of the lenders decided to withdraw their objection.
Chrysler’s debt is broken down into $5.9 billion held by banks that have received TARP funding and $1 billion held by the Chrysler Non-TARP Lenders Group. Two of the Non-TARP lenders, Oppenheimer Funds and Stairway Capital, hold $295 million combined (about 4 percent of the total) of the secured debt.
In a statement released this morning, Oppenheimer Funds said, “Given the reduced number of senior creditors willing to continue to pursue an alternative to the Federal Automotive Taskforce’s proposed settlement, Oppenheimer Funds 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. Therefore, Oppenheimer Funds has withdrawn from the Chrysler Non-TARP Lenders Group and will adhere to the determinations of the U.S. Bankruptcy Court.”
A lawyer from the remaining creditors, Thomas Lauria, has accused the White House of pressuring his clients by threatening them, and therefore sought to keep the lenders’ identities secret. Since the group could not provide enough evidence for the claim, the request was denied.
Six holdouts remain in opposition to the bankruptcy plan constructed by Chrysler, alliance partner Fiat SpA and the Obama administration. Given the increased pressure, however, the group may not be able to hold out much longer.
Source: The Detroit News