Wednesday, June 10, 2009

The Supreme Court Lets the Chrysler Deal Go Forward

The Supreme Court declined to hear an appeal of the Chrysler bankruptcy deal, less than 24 hours after Justice Ruth Bader Ginsburg issued a temporary stay. The two page decision notes that a stay "is not a right" but "an exercise of judicial discretion." The decision also quotes precedent that "in a close case it may be appropriate to balance the equities" and consider the "interests of the public at large."
In other words, this isn't a matter of fundamental rights, as Indiana state treasurer Richard Mourdock asserted, but just a matter of balancing competing interests. Mourdock complained that, as a holder of secured debt, the pension funds he manages should have trumped all other claims.
Holders of 92 percent of that debt agreed to accept 29 cents on the dollar, which sounds harsh. But then, there has been plenty of pain to go around. By the way, the New York Times reports,
Mourdock bought the debt last July for 43 cents on the dollar. He may have thought buying distressed debt was a reasonable bet at the time, but it strikes me as a rather speculative play for public pension funds.

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