A significant minority of General Motors Corporation bondholders are vowing to fight GM’s, government-sponsored re-organization plan even as the automotive giant files for bankruptcy protection.
GM Bondholders Unite says that its members are more committed than ever to stand up for their legal rights. “Bondholders are not asking for a handout or a bailout; GM’s bondholders just want a fair and equitable deal.”
“Individual investors helped build GM and this country. However individual investors have been systematically excluded from the negotiating table in the restructuring of one of America’s storied icons,” according to a statement by the group, which includes both small and large bondholders.
The existence of an aggressive group of bondholders who believe they have been disenfranchised could slow or complicate GM’s efforts to emerge from bankruptcy within the next 60 days to 90 days, but it is more likely the court will impose the proposed Treasury settlement on them.
Thomas E. Lauria, the attorney who represented the rights of dissident bondholders in the Chrysler Chapter 11 filing, has agreed to work with GM Bondholders Unite in representing the thousands of individual GM bondholders who have been systematically excluded from the negotiating table, the group added.
Lauria heads the financial restructuring and insolvency group at White & Case, one of the nation’s top law firms. He has been one of the most outspoken critics of the Obama administration’s Auto Task Force and last week represented a group of Indiana Pension Funds that had sought to block the deal that has allowed Chrysler to sell key assets to Fiat. The Chrysler-Fiat deal has now been approved along the lines outlined by the Obama Administration.
However, in the case of GM the number of bondholders is far greater, numbering more than 100,000. Chrysler had fewer than 50; the arguments will be the same, though. Cynics might say this will allow Lauria to recycle his previous work, collect huge fees in the process, and leave the bondholders in the same place that the Indiana Pension Funds are in today – their objections overruled.
GM Bondholders Unite describes itself as a group of small and large holders of General Motors debt determined to protect its members’ legal rights. It claims to be a non-partisan, non-ideological coalition of investors fearful that current proposals will wipe out the hard-earned savings of tens of thousands of people who made what they thought were conservative investments in a storied American brand.
GM has said that it has the support of more than 54% of the bondholders, allowing the automaker to proceed with the 363 Sale Proposals under bankruptcy protection. The 363 plan allows GM to divide into a new and old company. The new company is the part of the company that the Auto Task Force wants to emerge from bankruptcy within 90 days.
Cry me a river. The holders of these bonds paid a small fraction of their par value. Yet they want 100 cents on the dollar or else they would push the company into liquidation and the country, and thus the world, into a full blown depression. Parasites.
Bryan,
You are so far off base, its pathetic. Most bondholders DID NOT pay a small fraction, just the ones that now have CDS coverage (backed by AIG, and therefore backed by taxpayers.) Most retail bondholders (the ones that were excluded from negotiations paid full price for the bonds and deserve to be paid back the loan. It’s the greedy unions that ruined this company, yet because the Democrats are in power, the gave up little, while the bondholders gave up 90-95% of their equity.
You should do some research and check the fact before posting.
Well, actually it depends whether you are talking about dollar amounts or individual bondholders. Small investors did get hurt. Speculators got what they deserved in my opinion and both groups were represented.