Chrysler Creditors Attempt to Block Bankruptcy Deal

Carl Felsenfield on BBC World News, May 06, 2009

ANCHOR: A happy ending for Europe's automobile aristocracy, but acrimony for lenders at U.S. rival Chrysler. An attempt by a small group of Chrysler creditors to block a rescue deal with Italy's Fiat has been pushed back by a New York bankruptcy court. The judge refused to keep secret the names of creditors who were holding out. The late-night call session overshadowed new incentives offered by Chrysler on Wednesday.

Karen Nye reports from New York.

NYE: This is the U.S. Bankruptcy Court in downtown Manhattan. It's where Judge Arthur Gonzalez will decide the fate of the car company Chrysler and its creditors, some of whom want more money than the government has been willing to give so far.

The judge revealed the names of the holdouts: nine investment funds, including Oppenheimer, who are owed $295 million. They want 50 cents for each dollar invested. Larger creditors, who were owed $6.9 billion, agreed to accept just 29 cents on the dollar.

A bankruptcy expert said it's unlikely that smaller creditors will succeed in holding up the case.

CARL FELSENFELD, Professor, Fordham Law School: My prediction is they won't be able to hold it up. The force of the presidency, the needs of the public, the needs to have a viable automotive industry in the United States—these things, I think, are going to dominate.

NYE: A lawyer for suppliers of auto parts says his clients, who are accepting less money, want to get back to business.

SCHUYLER CARROLL, Lawyer for Part Suppliers, Arent Fox Attorneys: What they're really looking for in this instance is (a) to get paid back for the huge amounts they've been building up for the last six months to a year or so, and then, secondly, they want a going concern.

NYE: After denouncing the investors who are holding out for more money and calling them speculators, on Wednesday the White House sounded more positive.

ROBERT GIBBS, White House Press Secretary: We are extremely pleased the judge agreed with Chrysler and the overwhelming majority of its stakeholders that this process will provide a fair and orderly transaction that is in the best interest of the company and its creditors.

NYE: While lawyers for all sides continue to crowd into the bankruptcy court, consumers will be the ultimate judge when they walk into Chrysler's showrooms.

Karen Nye, BBC News, New York.