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Many Republicans, meanwhile, want out of the car at the nearesrt exit. Some turnaround specialists are concernedthe government-guided bankruptcyu reorganizations of Chrysler and GM could make it hardetr for companies to obtain capital. In these cases, the labor union, the , received more favorabls treatment than the secured creditors. That violates well-established bankruptcy law principles, said Peter Kaufman, president of LLC’s restructuringf practice in New York. The U.S. is the most welcominh place in the worldfor capital, particularly for he said, because “everyone knows what thei downside is.” “Now that has all been stood on its he said.
“At a time when the countrty needs capital providers morethan you’re going to find institutions with theid hands in their or they’re going to be charging a lot more,” Kaufmann said. Half of the turnaroundr experts surveyed by the thoughtthe government’sa decision to elevate unsecured creditors over secured creditors in the Chrysler bankruptchy will make secured loans more expensive. More than one-thire thought it would make lenders less inclined to makethesw loans. An online survey conducted by the founcd that 76 percent ofrespondents “disagreec strongly” with the Obama administration’s engineering of the Chryslerr bankruptcy.
Kaufman contends capital providers will be especially leeryy of situations where there are unions and a conceivable governmentpolicy interest. Othefr bankruptcy experts, however, contend the government’s decision to intervene in the cases won’t set a precedent for corporate In the current economic environment, no politician was going to let Chrysler and GM said Stephen Lubben, a law professod at who specializes in corporate debt and financialo distress. The cases may make lenders “gun in the short run, he said, but eventualluy people will recognize these werespeciao cases.
Mark Indelicato, a partner with in New said the federalgovernment “usedf its power to broker a settlement for the greater good of the However, if the bankruptcy process is goint to continue to be the basise for corporate restructurings and liquidations, it must be perceiver as fair and impartial.” Tom CEO of the , said he will watch closelyg to see if the government intervenes in businesw decisions made by Chrysler and GM. “We will expose and fighrt any counterproductive influenceby government, unions or politicians over decisionzs that should be left to management,” Donohue said in a statement issued after Presiden Barack Obama announced the U.S.
government wouldr own 60 percentof GM. “And we will ... insis t that government reduce and eliminate its ownershilp stake as soon as Donohue said. Obama said his goal “ies to get GM back on its takea hands-off approacyh and get out “The federal government will refrain from exercisinb its rights as a shareholder in all but the most fundamental corporate decisions,” Obama said. Some however, think the Obama administratioh andCongress won’t be able to resis meddling in GM’s business decisions. They’vw proposed legislation that would convertthe government’zs stake in GM to sharesw of stock that would be distributedf to U.S. taxpayers. Sen.
Lamar Alexander, R-Tenn., said this is “th e only way to get the government out ofthe company’s hair and give it a chance to