A group of hedge funds fighting the government's reorganization of Chrysler is disbanding after members decided they weren't powerful enough to fight the issue in bankruptcy court.
Friday, Oppenheimer Funds said "senior creditors can no longer reasonably expect to increase the recovery rate on the debt they hold by opposing the task force's restructuring plan." It withdrew from a small group calling itself the non-TARP creditors.
Stairway Capital, a New York hedge fund, also withdrew from the dissident group Friday. "Our group has become too small to have a voice within the bankruptcy," it said.
Earlier in the week, lawyers representing the funds argued unsuccessfully to keep their identities anonymous, claiming their dissention from the Chrysler reorganization plan had brought them heated criticism from powerful people in Washington and even death threats.
When the Chrysler bankruptcy was announced last week, there were 20 official dissenters, with $1 billion of the $6.9 billion of secured debt exposed. Funds dropped off the ad-hoc committee after pressure from Washington--and a personal attack from President Barack Obama--to accept the terms of the plan, which calls for the lenders to take 30 cents on the dollar in the sale of Chrysler to a group led by Fiat.
The dissenters wanted 60 cents on the dollar, arguing that their interests as secured creditors were being unfairly bypassed in favor of unsecured creditors (namely the United Auto Workers). "We fought for what we believe should be fair and equitable treatment under contract and bankruptcy law," Stairway Capital said Friday.
