In spite of their pleas for anonymity, the hedge funds that held out for a better deal on $6.8 billion in Chrysler LLC's secured debt have been outed by bankruptcy Judge Arthur Gonzalez.
The group, previously known as non-Troubled Asset Relief Program lenders and now referred to as CarCo Lenders Group, includes:
- Arrow Distressed Securities Fund
- Foxhill Opportunity Master Fund LP
- GGCP Sequoia LP
- Group G Partners LP
- Oppenheimer Master Loan Fund LLC
- Oppenheimer Senior Floating Rate Fund
- Schultze Apex Master Fund
- Schultze Master Fund Ltd.
- Stairway Capital Management II LP
The hedge funds that make up CarCo underwent tremendous pressure to get on board with an out-of-court restructuring of the carmaker, with President Obama even singling them out as responsible for the company falling into bankruptcy. But in spite of the that -- and the death threats they've also been receiving -- the hedge funds don't plan to roll over and play dead. After the Chapter 11 filing, they kept up the fight filing a motion to block the sale of Chrysler to Fiat SpA (
see related story from The Deal Pipeline). CarCo's counsel has maintained the hedge funds don't hold credit default swaps or hedges on the debt that would allow them to recoup their investment.
Not that the hedge funds don't have their supporters though, as a backlash against what is seen by some as an attempt to strong-arm lenders has also formed. Among those sticking up for them was Warren Buffett, who
warned that cramdowns like at Chrysler could have dire effects on lending markets. -
George White See Deal Pipeline story on Chrysler/Fiat saleSee Dealscape post on Warren Buffett
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The cram down is disturbing, but not as much as the ultimate equity positions. I still don't understand what "technology transfer" Fiat is supplying for a potential 35% equity position being handed to them. And, I'm even more confused about the larger union welfare plan share. Seems a more traditional Chapter 11 taking our time would have served everyone better.