Megan has a nice post explaining why the new Chrysler won’t be winner. But before that’s even an issue, Chrysler must first make it out of bankruptcy, and that’s not a sure thing.

Team Obama set up a cushy deal for their campaign contributors, but the hedge funds (which invest money on behalf of pension funds, among others) showed some integrity and wouldn’t go along. Team Obama was happy to skirt the normal process of bankruptcy law in order to benefit their cronies – now that’s fallen through. No wonder they’re upset!

I’m no bankruptcy expert, but I know that all of the creditors have rights (some more than others) and that one key question is whether the creditors are better served by outright liquidation rather than downsizing. Just determining that much could be a protracted process. And the creditors don’t have perfectly aligned interests among themselves. Bankruptcy judges are practiced in sorting these things out, but it won’t happen overnight.


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