Marketplace Scratch Pad

Chrysler creditors call it quits

Scott Jagow May 8, 2009

The Chrysler lenders who were putting up such a fight over the bankruptcy and Fiat deal have decided to throw in the towel. The creditors withdrew their protest today after a couple of the big players in the group abandoned the fight because the “financial and political costs were too high.”

From the Wall Street Journal:

“Being such a small group trying to fight the force of the government made [the funds] very uncomfortable,” said Thomas E. Lauria, a lawyer with White & Case LLP who was hired in early April to represent the creditors, who identified themselves as “non-TARP lenders.”

You can’t fight city hall. Or President Obama, apparently. Not without a lot more muscle.

The creditors say they’ll go along with whatever deal they get in bankruptcy, which isn’t likely to be a very good one.

But taxpayers won’t get a penny back of the $7 billion the government loaned to Chrysler. The government will get an 8% equity stake in the restructured company. Hope that turns out to be more profitable than being a bondholder.

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