Bondholders drop fight against Chrysler
NEW YORK - The group of dissident Chrysler bondholders challenging Chrysler LLC's government-backed restructuring plans said yesterday it is dropping its court fight.
The dissolution of the group - at least on an official basis - clears away the largest obstacle standing in the way of Chrysler LLC's plans to sell the bulk of its assets to Italy's Fiat Group SpA and could pave the way for a quick exit from bankruptcy protection.
Geoffrey Gwin, principal of the Group G Capital Partners LLC hedge funds, said that after weighing the obstacles ahead, along with the opposition they have faced before, the group's five remaining members realized they couldn't mount an effective legal challenge.
But that doesn't mean the deal reached before Chrysler's Chapter 11 filing - which would exchange the automaker's total of $6.9 billion in secured debt for $2 billion - has the group's support.
"We're still opposing this and not signing the consents, but the active fight has been more challenging," Gwin said.
Thomas Lauria, the group's lead attorney, said in a statement that the lenders he represented, and others, felt undue pressure from President Obama's administration to accept the deal.
The group eventually came to the conclusion that there weren't enough of them to "withstand the enormous pressure and machinery of the US government," he said.
In addressing Chrysler's Chapter 11 filing last week, Obama said the lenders were seeking an "unjustified taxpayer-funded bailout" after Chrysler and his auto task force cleared the company's other hurdles, including the Fiat deal and a cost-cutting pact that the United Auto Workers ratified last week.