UAW Chief Says UAW Taking "Great Risk" In Chrysler Deal

[BigElm]

TheGMSource - Ron Gettelfinger held a 5:45pm news conference yesterday to discuss the Chrysler situation. As you know yesterday is the date that nearly every Chrysler plant goes on a 60-day shutdown while the company makes its way through bankruptcy court.
Gettelfinger didn't lead much in the way of new information on the Chrysler bankruptcy but he did address the question of if the UAW received special treatment in a deal it reached with the now bankrupt automaker.
Gettelfinger responded to the question with a shrug and simple response. He said that terms of the new Chrysler deal will be released today and couldn't speak to specifics of the deal but did say that it would move "billions and billions" off the company debt sheet. He also said that the UAW traded "billions in debt for equity, and lets be honest, that equity is worth nothing right now."
He said that the UAW is taking a "great risk" with the deal it struck with Chrysler in the hopes of keeping the automaker out of bankruptcy. He said that the VEBA will be "very stressed" and retiree health benefits could become "strained" in the deal.
It seems as if Gettelfinger was bracing the UAW retirees for what may be a rocky go these next few years. Essentially the UAW traded in guarantees of health benefits for its retirees on a 50/50 chance Chrysler survives. If the automaker makes it, retiree benefits stay in tact. If the automaker folds then retirees are likely to lose all of their benefits.

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[Indocti Discant]

whoa whoaa whoaaa.. everything said and done they are still a junior creditor that is being given very very preferential treatment..

[matt30]

This will be interesting. The UAW has gone all in and are placing thier bets on the new Chrysler.

[Indocti Discant]

Originally Posted by matt30

This will be interesting. The UAW has gone all in and are placing thier bets on the new Chrysler.

not by choice.. they got blinded all in...

[SCRAPPYDO]

You mean one of the biggest reasons Chrysler went belly up, the UAW, is not partial owner?

HAHA...

Everybody on board the fail train. I hope these guys lose their butts. ON the other hand, if they are writing the checks to keep the company afloat, perhaps they will see how much of a leech they have been.

[rexster]

I feel very sorry for the regular Joes who work for the UAW. GM just handed the keys to the inmates and now Chrysler may do the same. How well will UAW management 'bargain' with themselves?

[SCRAPPYDO]

It may just work out. They may finally see how all the insane demands they make negatively effect the company. As crazy as it seems, perhaps its a blessing in disguise.

I seriously doubt it, as for this assumption to work, they would have to think more than 3 months into the future

[bakadayo]

Wasn't there another article where the UAW chiefs said they would sell the union stake of the company right away?

[rypt]

I thought that via bankruptcy they could just dump the UAW and start to use non union labour (perhaps by closing all Michigan plants in the process).

[rexster]

normally yes. unfortunately Obama got involved. in the case of GM he pretty much gave GM to the UAW.

actually he asked the CEO to resign then handed it over to the UAW.

[SCRAPPYDO]

Change you can believe in folks...

[SubaruFan]

So lets see UAW who drained the life out of GM - Chrysler and Ford now is a large stake holder in GM and Chrysler? Well people you keep biting the hand that feeds you some day you'll be left to fend for your self. This is UAW's sink or swim chance

[matt30]

Originally Posted by rexster

normally yes. unfortunately Obama got involved. in the case of GM he pretty much gave GM to the UAW.

actually he asked the CEO to resign then handed it over to the UAW.

Wrong. In a chapter 11 creditors become owners as as compensation for the money they are owed. This has nothing to do with Obama it's how Bankruptcy courts work. The new Chrysler will have the choice to hire the same unionized labor or not.

In GM's case they offered to give the company away. But that might not fly with other creditors who may not want to take the deal. And if it doesn't work for them, it won't work for anybody. This is GM idea about how to restructure after Obama said they wouldn't be given loans unless they could demonstrate they are viable.

[matt30]

Originally Posted by rypt

I thought that via bankruptcy they could just dump the UAW and start to use non union labour (perhaps by closing all Michigan plants in the process).

They can. But the UAW as owners can choose to, in effect, hire themselves.

[Indocti Discant]

Originally Posted by matt30

Wrong. In a chapter 11 creditors become owners as as compensation for the money they are owed. This has nothing to do with Obama it's how Bankruptcy courts work. The new Chrysler will have the choice to hire the same unionized labor or not.

In GM's case they offered to give the company away. But that might not fly with other creditors who may not want to take the deal. And if it doesn't work for them, it won't work for anybody. This is GM idea about how to restructure after Obama said they wouldn't be given loans unless they could demonstrate they are viable.

to be fair to rexster, Obama's govt did pressure the negotiations in such a way that the UAW got a very very good deal at the expense of more senior, and even secured creditors. The Bankruptcy courts here are not being fair, they are being processed the way Obama has been pressuring them.

[matt30]

Originally Posted by owace

to be fair to rexster, Obama's govt did pressure the negotiations in such a way that the UAW got a very very good deal at the expense of more senior, and even secured creditors. The Bankruptcy courts here are not being fair, they are being processed the way Obama has been pressuring them.

It has nothing to do with the court being fair or not. The court at this time is not really all that heavily involved. Chrysler has 60 days to propose their own plan. If any pressure is being exerted it's because 1) the governemnt has a 15 billion dollar stake in the negotiations and a rightful place at the table and 2) they've been talking to the creditors directly to get them to accept the deal. If the creditors objected to the plan and were irreconcilable, the court would move to a chapter 7 liquidation. If the creditors didn't like it, they wouldn't take the deal.

[Indocti Discant]

Originally Posted by matt30

It has nothing to do with the court being fair or not. The court at this time is not really all that heavily involved. Chrysler has 60 days to propose their own plan. If any pressure is being exerted it's because 1) the governemnt has a 15 billion dollar stake in the negotiations and a rightful place at the table and 2) they've been talking to the creditors directly to get them to accept the deal. If the creditors objected to the plan and were irreconcilable, the court would move to a chapter 7 liquidation. If the creditors didn't like it, they wouldn't take the deal.

The Court is currently involved. The Court is running roughshod over the 35%+(i think) secured lenders objections. The govt loans, were and should be subordinated to the existing secured debt.

As a result the strict rule of seniority is not being applied here, and secured lenders can throw their comfort in the priority rules out the window.

also dont forget that the majority of the group that went with the plan are TARP banks and it is very very likely that this is not being dealt as an "arms length transaction"

[matt30]

Originally Posted by owace

The Court is currently involved. The Court is running roughshod over the 35%+(i think) secured lenders objections. The govt loans, were and should be subordinated to the existing secured debt.

As a result the strict rule of seniority is not being applied here, and secured lenders can throw their comfort in the priority rules out the window.

also dont forget that the majority of the group that went with the plan are TARP banks and it is very very likely that this is not being dealt as an "arms length transaction"

I don't know where you getting this idea that the court is cart blanc running over creditors to appease the Obama administration when the court doesn't even hear arguments until the 21st. The only decision the court has made so far is for a 4 billion bridge loan while this process goes through.

And as far priority is concerned, it's usually the case that secured creditors are first. But things get more complicated when you introduce government money. I don't know if you're a lawyer but read 11 USC 500. And the creditors hadn't had a problem until a couple days ago, so this is all relatively new.

[Indocti Discant]

Originally Posted by matt30

I don't know where you getting this idea that the court is cart blanc running over creditors to appease the Obama administration when the court doesn't even hear arguments until the 21st. The only decision the court has made so far is for a 4 billion bridge loan while this process goes through.

And as far priority is concerned, it's usually the case that secured creditors are first. But things get more complicated when you introduce government money. I don't know if you're a lawyer but read 11 USC 500. And the creditors hadn't had a problem until a couple days ago, so this is all relatively new.

The approval of the sale to Fiat is going against their objections. (while the court hasnt really done anything that is technically in the wrong here it is skating on the edge of shadiness, i.e. w/o super majority (as should apply here) approval). Super majority is 51% of lenders + 51% of total principal.

Creditors had a problem quite a while back (1-2 months ago, i know people on the committee), it just became public.

Obviously things get more complicated when you introduce govt money.

To help me out here, could you point me to what part of USC 500 applies to this case (i.e. the injection of govt money)?

[Masterauto]

Nothing like getting THE FINGER in charge
Look at it this way, They are now partners with the US Govt. and now qualify for Govt. Pensions.

[SCRAPPYDO]

yeah, more tax payer money out the window...

by the way, the Obama administration said that the Chrysler company does not have to pay back the government loans, they have been excused.

http://volokh.com/posts/1241574478.shtml

[Nateness]

... does anyone else notice that Rick Wagoneer is in the background? I wonder what he's doing there...

[JC]

Originally Posted by SCRAPPYDO

yeah, more tax payer money out the window...

by the way, the Obama administration said that the Chrysler company does not have to pay back the government loans, they have been excused.

http://volokh.com/posts/1241574478.shtml

Ya that pissed me off too. And we are giving them more money! ****ing ridiculous just let them go out of business, they are going to anyway. Think of the worthwhile programs that money could have funded.

[SCRAPPYDO]

Think of the kids!!

So there you go, the Obama administration hates children...

HAHAA

I kid I kid










not really








No I kid.





NO I dont.

[matt30]

Originally Posted by SCRAPPYDO

yeah, more tax payer money out the window...

by the way, the Obama administration said that the Chrysler company does not have to pay back the government loans, they have been excused.

http://volokh.com/posts/1241574478.shtml

Except in return we're getting an 8% stake in the company.