Chrysler Bankruptcy & the Rule of Law
The Chrysler bankruptcy is headlining on Monday across the news and the blogs. Watch for these developments regarding its impact:
The allegations of threats received by clients of attorney Thomas Lauria.
Power Line links to the story and denial as reported by Jake Tapper and offers this opinion:
UPDATE: The Obama administration denies making the threats alleged by Lauria. The denial, however, is merely a bald assertion. Lauria is the head of the bankruptcy group at White & Case, and a Democrat who contributed $10,000 to the Democratic Senatorial Campaign Committee in 2008. In that sense, you could say that he helped to bring about the corrupt regime that is now bullying his clients. But his credibility vastly exceeds that of an administration spokesman who, having no knowledge of the facts, is sent out to issue a blanket denial.
Sunday evening The New York Times had this headline: White House Denies Claims of Threat to Chrysler Creditor. They provide a statement by Perella Weinberg, the firm which Lauria stated had been threatened by the White House.
At The Heritage Foundation, The Foundry comments on the Perella Weingberg statement:
The White House is denying the charge, as is Perella Weinberg. Interestingly, however, Perella — in denying that it was threatened — does concede that the decision was made due to political pressure and not just financial considerations. According to the firm’s statement, the firm stated the decision was made after considering the “president’s words” condemning the holdout creditors. “It is not our investment mandate to pursue political or risky legal campaigns,” it explained.
Perella Weinberg certainly would have much to lose in a political squabble with the White House. For instance, as noted in a Foundry post on Friday, the firm has a major consulting contract with the FDIC on banking issues.
The Detroit News is following the story here and here.
Development in the court hearings regarding the Constitution.
From Ed Morrissey at Hot Air: Senior creditors: Chrysler deal violates 5th Amendment
Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.
Ed quotes from the motion filed by Lauria and comments:
Brandeis acted to uphold contract law, especially in the face of a government interest in paying off politically-connected unsecured creditors ahead of the senior creditors. There is no other reason for Brandeis to make that decision, as only government could insert itself into the contractual relationship during a bankruptcy proceeding — just as Obama has done with Chrysler.
Lauria’s argument seems very compelling here, especially given Brandeis’ rather clear assertion that bankruptcy proceedings have to fall within the 5th Amendment — and that government can’t implement a taking to satisfy its own arbitrary aims by ignoring the relationship of the creditors to the default. We’ll see whether the court rebukes Obama.
Zero Hedge has also been following this and has several posts up. See Chrysler Non-TARP Lenders Come Out Guns Swinging (Pick Your Verb), Object To 363 Sale
Finem Respice is another blog to follow: here and here.
For background see: Traction & Tracking: Chrysler Story Picks Up Speed Will It Help Drive Approval Index Downhill?
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H/T: Power Line, The Foundry and Hot Air.
UPDATE: Andrew Stuttaford at The Corner highlights this post by John Carney of Business Insider:
Is The White House Lying About Perella Weinberg Threat Story?
UPDATE II: Bill Dyer at his Beldar Blog has a lengthy analysis Why I celebrate Chrysler’s petition for Chapter 11 reorganization . I wrote my headline before reading his post; note his main point:
Barack Obama is engaged in an assault on not just the entire system of business in the free world, but on the American rule of law upon which it is founded. And that, gentle readers, is why I celebrated Chrysler’s Chapter 11 filing. Instead of backroom deals made through strong-arm tactics, whatever happens now will take place under the disinfecting sunlight of the United States Courts. And that will, in turn, help frustrate Barack Obama’s scheme.
He also reminds us of Rahm Emanuel’s connection with Wasserstein Perella & Co.
[1]
The two most important issues here are that Chrysler cannot survive because they are a lousy company with lousy products
The second is the astounding assault on secured creditors represented by this deal. Lenders whose loans are secured by tangible property (real estate, equipment, whatever) will offer lower interest rates because of this security
Who will lend to any auto company in the future, knowing that President Petulant can put them on the same footing as an unsecured debtor at any time?
To be more precise: who in their right mind would EVER loan money to Chrysler again?
I suppose the plan is to keep these companies alive forever as zombies, propped up ad infinitum like Amtrak
It would be so nice if the President of our country wasn’t a Communist
Remember free enterprise…???
*sigh*
[2]
Don’t ya just love this little gem?
Hmmmmmmm…
One would think that the ”Constitutional Professor” should know of such provisions.
[3]
As far as Obama is concerned, the Constitution is dead. Could that be that he does not know anything about it?
[4]
Bbbbut all I hear lately is that he is so singularly qualified on the Constitution because he was a Constitutional Law Professor in that Prestigious College of Law in Chicago. So he MUST be, like, BRILLIANT when it comes to the Constitution, right?
On Fox this a.m., Kelly (on the show with Bill Hemmer) who was an attorney herself, was jaw dropping aghast at this situation. Apparently, this Lauria is a huge figure in the field of law, not only very credentialed, but a man known to be of very good character, as is his law firm. She said (with seeming knowledge) this will not end just because the WH is denying it took place.
[5]
beej, Lauria is a partner in an international firm that is supposed to be tops in bankruptcy. I’ve read he is supposed to be on Fox with Megyn Kelly tomorrow. I haven’t seen that confirmed, but we’ll see. There are a lot of interesting details about this swirling around on the web.
[6]
I’m seeing more and more references to the bullying of Chrysler in various blogs. It may not be their lead story, but, it’s now being inserted into dialogues critiquing Obama’s style of leadership in uncomplimentary language.
Hopefully this will continue to build to some worthwhile crescendo, if nothing more than because of the powerful players involved –> Lauria, a major car company’s stock holders and what not. By bringing the strong-arming that is being done to Chrysler into the conversation, it may also wake people up and pull into the light of their reason some of the other jaw-dropping moves Obama has made in the last 100+ days!
[7]
First banks are forced to take TARP money, then Obama Treasury refuses to let them give it back, then Obama takes over GM and Chrysler and fires the GM CEO, now Obama puts unsecured creditors (labor unions) ahead of secured creditors in a strong arm tactic.
Obama has violated his oath of office to uphold the Constitution. This isn’t the first time just the most obvious. Of course the WH will deny they behaved like Mafia goons. But I bet Zero, Rahm and Axerod are laughing about giving Peralla Weinburg and “offer they couldn’t refuse”.
How long before Lauria is sleeping with the fishes?
[8]
where did my comment go?
[9]
must have been a DC time warp caused by the 1920’s Capone style antics from the WH.
Plus a friend sent me an e-mail that DHS wants to monitor her twitter account.
[10]
I’ll check Judy.
[11]
I was adding another update to the post. It may have hit at the same time as your comment.
I can’t believe that about DHS. What’s wrong with these people?
[12]
Nice time line you put together Judy, on the TARP all the way to the present for the auto industry. It puts all the manipulation into perspective.
All I can say is, “Whew!”
[13]
Also INC..
Kudos on your research, which is not an unusal feat for you. There a whole lot of reading to do there!
[14]
Thanks, Jan. It took a lot of gleaning, believe it or not, to get it down to this!
[15]
INC
The following fits in with the potpourri of Chrysler articles you’ve culled above:
The lawless presidency
[16]
INC- excellent work! excellent post! thank you! the country NEEDS real investigative analysis.
And this Chrysler case has HUGE broader economic impacts. Rule of law and the definition of “bond” and the intrusion og government in private business areall on the line.
[17]
We can only hope the judge is not intimidated and that he upholds rule of law. Essentially, Barack has used our (taxpayer) money to buy himself some form of influence over the proceedings. That is the only explanation for using taxpayer money at the 11th hour. In this crazy world I am still not sure if rule of law will be allowed to prevail.
[18]
wildernesstea, thanks! I’m glad you liked the post. I think this is a huge story and may it help bring down the house of cards of overreach. I also hope the judge stands firm. He has done some major bankruptcies in the past and is not a lightweight.