Chrysler claims the agreement with Fiat is the best deal it can get for its assets and is critical to the company's plan to emerge from Chapter 11 bankruptcy protection.
But a trio of Indiana state pension and construction funds, which hold a small part of Chrysler's debt, have been fighting the sale, claiming that it unfairly favors Chrysler's unsecured stakeholders ahead of secured debtholders like themselves.
As part of Chrysler's restructuring plan, the automaker's secured debtholders will receive $2 billion, or about 29 cents on the dollar, for their combined $6.9 billion in debt. The Indiana funds bought their $42.5 million in debt in July 2008 for 43 cents on the dollar.
The Administration's heavy-handed interference in the auto industry, and its willingness to tear up contracts for political reasons, endangers further investment not only in U.S. automakers, but all U.S. companies. America owes its economic strength to many things, including our educated workforce, our entrepreneurial spirit, and our relatively business friendly climate. But in troubled economic times, investors come to the U.S. for safety. They know that their assets in American companies won't be confiscated or wiped out at the whim of the ruling class.
We tinker with the rule of law at our own peril.
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