Joined: Sep 2008, #9559
Location: Katy, Tx
be careful what you are going to hear on the "news" over the next few days... they will spin this to make the bond holders look evil. Obama will also make them out to be the bad guys.
Letter from a bond holder:
APRIL 29, 2009, 9:19 P.M. ET
Gwin's Letter to the Editor Wall Street Journal: 'Why Save Chrysler'
Geoffrey Gwin, a principal at Group G Capital Partners LLC, is among the bank lenders to Chrysler who could
determine the fate of 80,000 retirees and existing employees. In a letter to the editor to the Journal below, Mr.
Gwin discusses his struggle in making a decision that could affect so many lives.
* * *
I am one of the investors that may soon have to cast a vote on whether to forgive Chrysler's secured bank debt,
allowing the company to forego bankruptcy. I run a small investment fund, and when I purchased Chrysler debt
more than a year ago, I did not envision that deal would lead to a potential vote that will affect the lives of
thousands of working families all across America. My decision to invest was based on careful analysis of what
appeared to be the market's undervaluing of Chrysler's assets, which secured the loan. The weight of evidence at
the time suggested that even in bankruptcy lenders would have access to their collateral and a reasonable
It is very possible in a few days I may be asked to make a difficult choice: vote to agree with what the TARP banks
have had forced on them by our government or vote "no." It is possible my "no" would force Chrysler into
bankruptcy but potentially reduce our funds losses. If you believe the rhetoric of the Obama administration,
bankruptcy is not such a bad option. But the anxiety of Detroit politicians seems to suggest otherwise. I agree with
former GM Chairman Rick Wagoner, it is a roll of the dice a prudent man probably wouldn't take. But of this I am
certain: Obama car czar Steven Rattner's advice, as well as the whisperings of hundreds of hungry bankruptcy
professionals, are not words to be wholly trusted either.
It has become fashionable to point fingers at investors like me and say we are greedy, only interested in preserving
our own financial empires (FYI: my empire right now is three kids in a small, two-bedroom New York apartment).
But to cast this as a case of investor greed ignores a much more complex picture. For years, the UAW has elicited
benefits from Chrysler that far exceeded those accrued by workers in other manufacturing sectors. The Chrysler
rank-and-file has long enjoyed pensions and health care unseen by the majority of Americans. Ultimately,
Chrysler's and its workers' inability to rein in such costs during the golden days of the American car industry has
left the company extremely vulnerable during the economic storm our country is now enduring.
The administration and others argue that the "right thing to do" is to save Chrysler and thereby ensure the
livelihoods of all its workers, retirees, and the workers at Chrysler suppliers. This at the expense of the right's of
creditors, such as my company. But the administration should concern itself with the nobler cause of preserving
the fundamental system of laws governing creditor rights. It was this system that allowed bankruptcy without
government involvement to bring order to companies that have become unsustainable -- a critical cog in the
clockwork that has yielded the most prosperous economy in the world. Our economic system relies on the trust
investors put in the interlocking principles of creditor rights, transparency, and a free market where the
government is a referee and rarely a player. Indeed, the mechanism needs regular tuning but eliminate a critical
cog, such as creditor rights, and the entire enterprise will grind to a halt.
I am deeply sympathetic to the families that will be affected by my decision. I have personal experience with the
very real pain of bankruptcy. Shortly before I was born, my father started a career at Delta Air Lines that would
span 30 years. Airline families dominated the Atlanta community in which I grew up. I watched as dozens of my
friends' parents-pilots, flight attendants, mechanics, gate agents, office workers lost their jobs, health care, and
pensions when Eastern Air Lines declared bankruptcy. From that time on our family always carried the fear that
what could happen to Eastern could happen to Delta. Two years ago, my father, by then a Delta Air Lines retiree,
along with hundreds in our community lost the bulk of their retirement and health care benefits when Delta
declared bankruptcy. No government task force came to their rescue -- nor did one arrive to save the Pennsylvania
steel mills or South Caroline textile mills, or the thousands of other companies that have faced this painful
So why save Chrysler? I am inclined to say let the market run its course. Allow poorly managed companies to reap
what they have sown. History shows us that if the government plays its proper role and enforces a fair set of rules
by which we all adhere, our economy will flourish. But if we are changing the rules and allowing the government to
pick winners and cast aside more than two centuries' of upholding creditor rights, then I offer President Obama
this deal: You can have my personal share of the Chrysler loan free and clear, but give my Dad back his Delta
pension and health care benefits. I think it makes sense-after all we are only adding one more to the 50,000
hard-working American families saved.
Group G Capital Partners LLC