Shotgun Wedding: Court Docs Reveal Govt. Likely Forced Chrysler Deal With Minimal Knowledge of Fiat
Even if they ultimately lose their last-minute court battle, the Indiana pension funds defending their rights as secured first-lien creditors of Chrysler have done a valuable deed.
We have learned, among many other things, how at least one government lawyer characterized the funds' lawyer, Thomas Lauria.
A $10,000 Democratic Party donor, Lauria, despite clear evidence of intimidation of his originally larger pool of clients by Barack Obama himself (in his April 30 speech announcing the company's bankruptcy filing) and his car guys, has nonetheless bravely pursued the important contract law and fiduciary duty issues involved in the shortchanging of his clients for several weeks.
Wait until you see the word the government lawyer used to describe Lauria.
As a result of Lauria's legal efforts, we have also learned of e-mails showing that the government drove the Chrysler-Fiat deal over Chrysler management concerns, and did so despite more than likely knowing very little about shotgun marriage partner Fiat.
All of this and more is in a report published last night in the Wall Street Journal by Neil King Jr. and Jeffrey McCracken.
Here are key paragraphs revealing containing items I expect most of the rest of the establishment media to ignore (bolds after title are mine):
U.S. Pushed Fiat Deal on Chrysler
The Obama administration rushed an alliance between Chrysler LLC and Fiat SpA despite Chrysler's worries about Fiat's financial health and its willingness to share technology, according to internal company emails.
The emails show Fiat ignoring requests for documents and trying to change contract terms late in the talks. A Chrysler adviser at one point said the deal risked looking as if the U.S. auto maker and the Treasury Department, which helped broker the pact, were "in bed with a shady partner." In another note, an official referred to the Treasury Department as "God."
..... On Friday, a federal appeals court upheld Chrysler's Fiat deal, dismissing a challenge by dissident Chrysler debt holders. But the court also issued a stay until 4 p.m. Monday -- leaving a small window for Thomas Lauria, the lawyer pursuing the case, to appeal to the Supreme Court. One judge on the three-judge panel suggested the Supreme Court should have "a swing at this ball."
Mr. Lauria's persistence led one government lawyer in the Chrysler case to dub him a "terrorist" in an email to a Chrysler adviser.
..... The emails, which run from mid-March until early May, were put into the court record following a request by Mr. Lauria, the lawyer fighting the bankruptcy on behalf of various Indiana pension and investment funds that hold Chrysler bank debt. They argue that the case has trampled on established bankruptcy law.
..... Chrysler's advisers told the company their Italian counterparts were refusing to provide sufficient financial information to evaluate the deal. A team sent to Fiat headquarters in Turin, Italy, reported back on March 14 that "no financial due diligence ... has or can be performed."
An internal memo 13 days later from Chrysler's advisory team also said Fiat's "off-balance-sheet investments" in joint ventures around the world posed an economic risk and a political risk," including the appearance that "Treasury/Chrysler" was "in bed with a shady partner."
Eight days before President Barack Obama announced his support for the alliance in an April 30 speech, Chrysler officials were still bristling over what they considered Fiat's unwillingness to provide even basic information about its finances.
..... Fiat is putting in no cash.
..... Despite the push to do a deal with Fiat, Chrysler advisers continued into April urging the Treasury to think again about a potential merger with GM. Earlier talks between the two auto giants had broken down in November, and the Obama administration put little stock in the idea.
How did "Treasury/Chrysler" get from "lacking basic information" about Fiat's finances to completing sufficient due diligence to support making the deal with a very complex company in eight days? Additionally, Fiat's "off-balance-sheet investments" seem to have a whiff of Enron-like potential.
The two WSJ reporters also reveal how the government, despite the urgings of Chrysler management, refused to explore the viability of combining it with deeply troubled but at least financially transparent General Motors.
The funds are appealing to the Supreme Court. Bloomberg reports that "A creditor bid for Supreme Court intervention would likely go first to Justice Ruth Bader Ginsburg, who handles emergency matters from the New York-based federal appeals court that ruled yesterday. She could act on her own or refer the request to the full nine-member court." Justice Ginsurg's gatekeeper function would appear to indicate that the Indiana pension funds will see not see justice served.
Cross-posted at BizzyBlog.com.