From the “how’s that for irony” file comes a report that the judge that signed off on the GM bailouthas 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 creditorsin 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.