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Obama Vows Swift Overhaul As Chrysler Enters Bankruptcy
A group of about 20 investment firms that declined to go along with the deal released a statement yesterday rejecting the government's characterization and criticizing the negotiating process.
The group did not identify its members, but sources said it includes Perella Weinberg, Stairway Capital and OppenheimerFunds.
The group said its members had been "systematically precluded" from engaging in direct negotiations with the government.
Those negotiations had been dominated by four large banks that own 70 percent of Chrysler's debt -- Goldman Sachs, Citigroup, J.P. Morgan and Morgan Stanley. Each has received government bailout loans through the Treasury's Troubled Assets Relief Program.
"We have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds," the lenders said in a statement. "In its earnest effort to ensure the survival of Chrysler and the well-being of the company's employees, the government has risked overturning the rule of law."
One of the key aspects of the bankruptcy will be its duration, many analysts said, and administration officials promised a relatively quick one. They noted that most parties involved have already agreed to concessions.
But some bankruptcy specialists warned that the court process can be unpredictable and difficult to manage in the case of a company as vast as Chrysler. Fearing the worst, for example, the National Automobile Dealers Association, which represents Chrysler dealers, has hired law firm Arnold & Porter to protect dealer investments.
The administration's assertion that the bankruptcy could wrap up within 60 days "is something I would expect someone who has never been involved in a bankruptcy would say," said Jean Robertson, chair of business restructuring at Calfee, Halter & Griswold. "There is nothing typical about this case. It's like Frankenstein, and Frankenstein isn't pretty."
Richard C. Breeden, the former Securities and Exchange Commission chairman and court-appointed monitor of WorldCom during its massive bankruptcy, said the time spent under court protection may be less important than the quality of the results.
"One of the most devastating situations is when companies go into bankruptcy and don't cut deeply enough," he said, citing the example of US Airways. "That would be truly devastating here. If you don't use the tools of bankruptcy to cut enough cost and fail again, then your customer impact is vastly greater and you put yourself on a path to liquidation."
Jim Arrigo, owner of two Florida Chrysler dealerships and chairman of the national Chrysler dealer council, said that despite the bankruptcy filing, he remained "very optimistic."
"Unfortunately some people out there in the banking industry have not come to table," Arrigo said. "They alone are responsible for us going into this. But as long as we come out the other side, that's all that matters."
Staff writers Binyamin Appelbaum and Tomoeh Murakami Tse in New York contributed to this report.