U.S. Is Treating Auto Creditors Unfairly; Unions Have Big Advanatage Over Lenders

Chrysler LLC and General Motors Corp. debt holders are receiving unfair treatment from the U.S. government, according to Edward Altman, creator of the Z-Score formula that calculates a company’s probability for bankruptcy.

Chrysler, in a U.S.-negotiated deal, is paying its creditors 29 cents on the dollar in a sale of most of its assets through bankruptcy to a company controlled by Fiat SpA. GM debt holders will be treated similarly in an “inevitable” bankruptcy, Altman said today in an interview with Bloomberg Television.

From Bloomberg
.

“They’re taking a hard line with respect to the creditors and they’re forcing them to take, in their eyes, a very poor deal,” said the 67-year-old finance professor at New York University’s Leonard N. Stern School of Business. “I’m not saying it’s illegal, but it does seem to be unfair.”

Chrysler LLC and General Motors Corp. debt holders are receiving unfair treatment from the U.S. government, according to Edward Altman, creator of the Z-Score formula that calculates a company’s probability for bankruptcy.

Chrysler, in a U.S.-negotiated deal, is paying its creditors 29 cents on the dollar in a sale of most of its assets through bankruptcy to a company controlled by Fiat SpA. GM debt holders will be treated similarly in an “inevitable” bankruptcy, Altman said today in an interview with Bloomberg Television.

“They’re taking a hard line with respect to the creditors and they’re forcing them to take, in their eyes, a very poor deal,” said the 67-year-old finance professor at New York University’s Leonard N. Stern School of Business. “I’m not saying it’s illegal, but it does seem to be unfair.”

Read the rest:
http://www.bloomberg.com/apps/ne
ws?pid=20601009&sid=aODY6TuurzGY

The unions were given preferetial treatment over the lenders but may have to make concessions to satisfy Fiat….

Related:
Fiat threatens to walk away from Chrysler deal unless unions agree to concessions

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