Tom Lauria represents a few of the non-TARP Chrysler creditors. He reported the threats on WJR radio host Frank Beckmann’s radio show in Detroit:
Zero Hedge summarizes and surmises:
In an interview of momentous importance, WJR’s Frank Beckmann interviews Tom Lauria, the Head of Restructuring at top five law firm White & Case, in which the lawyer, who represents Chrysler hold-out hedge funds Stairway Capital and Oppenheimer Funds, discusses on the record the amazing treatment by the White House of Perella Weinberg, which initially had been a transaction hold out but after threats by the White House (not my words) was forced to drop their objection and go with the administration. Says Lauria:
“One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight…That was Perella Weinberg.”
…The full interview with Tom Lauria below is a must hear for everyone as it discloses not only the administration’s strong arming tactics in black and white, but also discloses some other critical facts that the president on his regular TV appearances has failed to mention such as:
– First lien holders were willing to accept a 50% discount on their positions, however the 71% demanded by the administration was seen as too much.
– The cash going to Junior claims (creditors below the first liens) will be between $10 and $20 billion, a number which in practice should satisfy a par recovery for the 1st liens if the Absolute Priority Rule was actually withheld.
– Among the creditors are not just vulturous hedge funds but “pensioners, teachers, credit unions, college endowments, retirement plans, and personal retirement accounts.”
In conclusion, Lauria summarizes the developing Chryslerf#%k best:
“The President is trying to abrogate contractual rights; if he will attack that contractual right, what right will he not attack?”
The only surprise is that anyone is surprised. The coercion cow has been out of the barn for a while now.