Chrysler Bond Holders Go To Supreme Court

I personally find it utterly unconscionable that the law of this land has become so subverted by the Obama administration that Chrysler bond holders have now been forced into an emergency filing with the U.S. Supreme Court:

“…a stay of the Sale Orders pending final resolution of the Indiana Pensioners’ forthcoming petition for writ of certiorari—on as expedited a schedule as the Court finds necessary—is essential to preserve the Court’s jurisdiction. Without a stay, the section 363 sale will close as soon as Monday, June 8 at 4:00 p.m., which is when the present stay issued by the Second Circuit will be lifted. Stay App. 74a (Second Circuit Mandate). Under section 363(m) of the Bankruptcy Code (11 U.S.C. § 363(m)), closing the sale will essentially moot the case.

If that happens, a number of consequences will follow:

(1) The United States Department of the Treasury (“Treasury”), purporting to utilize powers conferred upon it by the Troubled Asset Relief Program (“TARP”) established under the Emergency Economic Stabilization Act of 2008, 12 U.S.C. 5201 (“EESA”), will have been permitted to structure and finance the reorganization of Chrysler without any judicial review of its authority to do so (the Bankruptcy Court incorrectly disposed of the issues by deciding that Appellants lacked standing);

(2) Chrysler will have been permitted to reorganize under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. 101 et seq. pursuant to a transaction that was structured and financed by Treasury, without having been required to comply with the procedural and substantive requirements of the Bankruptcy Code for doing so; and

(3) The secured claims of Chrysler’s first lien lenders (including the Indiana Pensioners) and any unsecured deficiency claims they may have if their collateral properly valued is in fact worth less than the amount they are owed, will have received materially less favorable treatment than most of Chrysler’s general unsecured creditors.

As such, absent a stay, the Court will be deprived of the opportunity to decide critical, nationally significant legal issues relating to management of the economy by the United States Government.”

At issue is the structure of Chrysler’s bankruptcy in which bondholders – by law the most secured creditors – have deliberately been given short shrift by the administration in favor of those who have unsecured interests in the company.  The Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund and the state’s Major Moves Construction Fund stand to lose millions of dollars while the U.S. and Canadian governments and the UAW cut blithely to the front of the line and take ownership stakes in a sale of Chrysler to Fiat.

The lower courts have upheld this bizarre and unprecedented bankruptcy construct; as recently as Friday the federal appeals court in New York gave the bondholder shaft its own seal of approval.  Interestingly, and somewhat telling in these days of Pater Obama, this government-beholden court gave bondholders until Monday afternoon to persuade the Supreme Court to intervene.  Unwilling to put on its big boy panties and stand up to the Obama administration by upholding the laws that give those who take the most risk in providing funding to a business the first rights of payback during a bankruptcy, it is quite evident that the New York federal appeals court is pawning off its job.

As part of her job, Supreme Court Justice Ruth Bader Ginsburg will receive the emergency filing today.  I see this as a test; a big test.  For it is the job of the Supreme Court to rule on law, and do so blindly.  There can be no “empathy” nor any partiality to political affiliations, all of which seem to be part and parcel of this Obamastein’s monster of governmental abuse of powers. 

In Bush v. Gore, 531 U.S. 98 (2000), Justice Ginsburg concurred with the dissenting Supreme Court opinion that:

What must underlie petitioners’ entire federal assault on the Florida election procedures is an unstated lack of confidence in the impartiality and capacity of the state judges who would make the critical decisions if the vote count were to proceed. Otherwise, their position is wholly without merit. The endorsement of that position by the majority of this Court can only lend credence to the most cynical appraisal of the work of judges throughout the land. It is confidence in the men and women who administer the judicial system that is the true backbone of the rule of law. Time will one day heal the wound to that confidence that will be inflicted by to day’s decision. One thing, however, is certain. Although we may never know with complete certainty the identity of the winner of this year’s Presidential election, the identity of the loser is perfectly clear. It is the Nation’s confidence in the judge as an impartial guardian of the rule of law.

I find it very troubling that we must now sit and wonder if the confidence in America’s judiciary will continue to remain so shaken.