Conservative Wanderer

“A troubled and afflicted mankind looks to us, pleading for us to keep our rendezvous with destiny; that we will uphold the principles of self-reliance, self-discipline, morality, and, above all, responsible liberty for every individual that we will become that shining city on a hill.” — Ronald Wilson Reagan

GM Bailout Could Be Undone By Same Judge That Allowed It

From the “how’s that for irony” file comes a report that the judge that signed off on the GM bailout has been having second thoughts, because — surprise, surprise, surprise — he wasn’t informed about part of the deal.

The Washington Free Beacon reports:

As GM teetered on the edge of bankruptcy in June 2009, it cut a $367 million “lock-up agreement” with several major creditors in order to prevent its Canadian subsidiary from going under. The move spared the subsidiary from fulfilling the $1 billion debt it owed the creditors—major hedge funds—ensuring that GM would not have to face bankruptcy courts in two nations, which could have delayed the company’s recovery.

The trustee for (old GM) creditors shortchanged by the government-driven bankruptcy are now suing the hedge funds in a move that could undo the bailout.

“Many U.S. creditors waived their rights to object because the government wanted to push through the bailout for political reasons,” risk analyst Chris Whalen said. “If they had continued through normal channels, they could have easily been in bankruptcy for five years. So they made sure these issues were not adequately briefed before the court.”

The GM that exited bankruptcy was radically different than the one that entered. The Treasury Department arranged for the company to split into Motors Liquidation Co., known as “old GM,” and created a “new GM” with the help of $30 billion from American taxpayers. Judge Robert Gerber, who approved the sale with little hesitation, could now reverse the entire auto bailout—and overturn one of President Barack Obama’s signature achievements.

“When I approved the sale agreement and entered the sale approval order I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs. It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all,” Gerber said in July.

Well, what do you know, the Obama Administration didn’t reveal all the details to the judge. Is anyone surprised that this gang of Chicago thugs decided that the judge didn’t need to know the sweetheart deal that would save their union buddies?

It sounds like Judge Gerber is ready to reopen the whole thing, essentially forcing GM into a real bankruptcy, including having to pay back the $27 billion to the Treasury… which, given that they only have about $30 billion on hand, could spell the end of GM.

If we’re lucky, this will come apart very soon… just in time for the non-political-wonks to read the news as they’re deciding whether or not Obama deserves a second term.

(h/t “DutchTex” at Ricochet.)

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  • mechanic540

    That would be sweet and because it would be so, I doubt it will happen in time,even if at all. This is Chicago politics after all.And the goon squad owns the IRS at the moment.And Justice,Interior,Treasury,etc,etc,etc.

  • SeanSorrentino

    The rule of law is a bitch.
    I guess that’s why the Left hates it so much.

  • Rick Caird

    I am still upset about the senior bondholders getting the bad deal. Hundreds of years of bankruptcy law supports the idea is that the senior bondholders are first in line and not a union pension fund. If it is possible to undo the deal, that aloe is enough.

    • http://conservative-wanderer.com/ Conservative Wanderer

      I agree, Rick, that’s why I never liked the GM bailout. I really hope the judge decides to reverse it.

    • theeprog8r

      YES, my family had about 500K in a secured bond with them when they flipped the rules on bankruptcy and screwed them. Please flip this case.

  • CuriousKevmo

    I’m not good with that fancy book learnin’ but how would this even work? Isn’t it a little like trying to get the toothpaste back in the tube?

  • orbicularioculi

    You mean Obama LIED to the judge? Obama has been a serial dissembler, liar and fiction writer and embellisher all of his adult life. So what’s new, here?

  • M_Becker

    Had they gone through a traditional structured bankruptcy, GM would still be in business, their suppliers would still be in business and the secured parties that got stiffed would have been paid – primarily pension funds and 401Ks.

    In addition, the bankruptcy court would almost certainly have restructured GM’s union contracts, reducing their hourly wage to something like market and driving a stake through the heart of their pension and heath care benefit packages.

    As it stands today, GM is “still in business”, but their position is tenuous at best. Their labor costs in the US are still 50% higher than their competition and their Euro marketing group is on their last breath. In addition, the UAW effectively controls the GM board, given the seats they’ve been given and the seat the US government holds, and they will certainly vote those shares (almost 1/3 of the total outstanding) in favor of whatever the UAW wants.

    I hope the judge overturns the whole package.

  • Fat_Man

    I know Gerber. He is a weasel.

  • http://profile.yahoo.com/UAVKA4NLR2IV3HQMNCH26QOS4Q KWalsh

    I wonder if there is any chance that the shares of old GM stock would be valid again (even if not worth much)?

  • teapartydoc

    Do it!

  • http://www.facebook.com/barb.beasn Barb Beasn

    Is it a judge’s job to save jobs or to follow the rule of law?

  • PDQuig

    Gerber better hope that neither he nor his family have any skeletons in the closet. You can bet the boyz from Chicago are going to make his life hell for even considering screwing with their deal.

  • http://www.facebook.com/gannddr Dave Gann Sr

    Don’t worry lawyers will drag the ruling out way past the election.

  • AnneCink

    If the media would do even a “sufficient” job of covering Obama’s antics, they would have uncovered this. When the administration is allowed to act with no accountability whatsoever, they get away with murder!!!!!

  • http://www.facebook.com/rick.sheldon.96 Rick Sheldon

    I only know that about 20,000 workers from from 2 Dayton Ohio and surrounding Plants lost $20,000-35,000 in Retirement funs THAT THEY PAID IN. When Obama came to Dayton they lined the streets all with ROMNEY SIGNS and I assume that was clear across the country..And to shake your memory They closed 2,200 self sufficent family owned dealerships that had been in business since conception of GM and a loss of 220,000 loyay dealership employees…Everytime govt. get involved its always bad just ask NASA…..

    • bobby_b

      ” . . . they lined the streets all with ROMNEY SIGNS and I assume that was clear across the country.”

      Clear across the country? Hardly. There was very little visual coverage of that particular trip. Usually, they play those trips up to show O’s “massive support.” This time, they mostly just told us about the “massive support”, without pictures.

      I wonder why they covered this one differently?

  • http://twitter.com/Miller51550 Bob Miller

    Well… Well… We finally get an HONEST JUDGE!

    Seems there is some integrity LEFT in their Ranks.

    There should be no DOUBT that if OBAMA is reelected.

    This JUDGE will be removed from the case.

    What America needs to know.

    is that Obama, IS, HAS BEEN, and WILL BE DISHONEST with the America People. IF it advances his POWER and helps out the BIG UNIONS.

    VOTE NO FOR OBAMA AND THE DEMORATS IN NOVEMBER.

  • http://twitter.com/tommy4usa tommy4usa

    I Now cant walk on my left foot,turns out the recalled buick failed and I was in a 1 car accident ,faulty steering ,well I saw a window into this and filed a claim for $80 MILLION , BUT surprise, surprise, surprise seems in 2006 i filed with Social Security and have still not recieved word on my claim (Fox Protecting the Fox that raided the Hen House),it is now in 8th circut of appeals “how’s that for irony” Those 3 panel judges saw the fraud ,,I have an Appeal in the 9th? NY circut against GM still Pending ,I think maybe I might get my claim after all,I Know both cases were heading to the SCOTUS and surely they would have ruled in my favor of some sort of award,I am Lucky to be Alive ,I just cant walk normal or use any left side of my body ,It even affects going #1 and #2 , No Money in the world can replace that ,well Thanks Mom and Dad ,if you had anything to do with it Thanks ,RIP and till one day we meet again Love Ya

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