Chrysler lenders group releases list of 9 members
The group of lenders that had balked at the government-orchestrated sale of Chrysler has grown noticeably smaller in the week since the automaker filed for bankruptcy.
Once numbering more than 20, the group counted just five members Wednesday after a federal bankruptcy judge ordered members to identify themselves publicly.
The funds, which include Group G Capital Partners, Schultze Asset Management and Foxhill Capital Partners, together hold $295 million of the $6.9 billion in senior secured Chrysler debt, according to a newly filed court document. Also in the group are the asset manager OppenheimerFunds and Stairway Capital, a Long Island, N.Y., hedge fund, which are leading the effort.
The disclosure comes after U.S. Bankruptcy Judge Arthur Gonzalez ordered their identities revealed by noon Wednesday. Attorneys for the lenders had sought to keep the names secret, citing threats to their clients’ safety and damage to the lenders’ reputations.
The lenders were sharply criticized last week by President Obama, who blamed them for forcing the third-largest U.S. automaker into bankruptcy. Obama had characterized the group as selfish “speculators.”
George Schultze, the managing member of Schultze Asset Management, had said last week that his firm was “simply seeking to enforce our bargained-for rights under well-settled law.”
“Hopefully, the bankruptcy process will help refocus on this issue rather than on pointing fingers at lenders,” he said.
The government had offered 33 cents on the dollar for the $6.9 billion in loans held by senior debt holders. Most of the lenders, including four large banks that have accepted government rescue funds, had consented to the deal. The dissident lenders believe they could recover more in a liquidation.
“Their preference, quite frankly, is to not get in harm’s way,” Tom Lauria, a lawyer representing the lenders’ group, said at a packed hearing Tuesday in requesting that his clients’ names remain secret. Lauria said some lenders had agreed to join the legal battle only if they could remain anonymous.
The judge’s denial Tuesday of the group’s request came the same day he approved, over strong objections from the dissident lenders, a key part of Chrysler’s plan to restructure quickly by selling most of its assets to Italy’s Fiat.
The latter ruling provides a critical boost to the government’s goal of reorganizing the automaker fast enough that suppliers and potential customers aren’t scared away. Chrysler plans to use the bankruptcy process to sell its assets to a new entity jointly owned by Fiat, the United Auto Workers and the U.S. and Canadian governments.
The sale procedure approved by the judge sets a May 20 deadline for potential bidders to put in competing offers, with a hearing May 27 to approve the sale. Chrysler contends that a swift proceeding was critical for it to remain a viable company. The dissident lenders argued that the rushed timeline effectively shut out any bidders that might be interested in offering different terms.
