"Perhaps it's idealistic of me, but the American bankruptcy system actually works very, very well. I think we should be very cautious about mucking with it, particularly when there's no reason to. The administration didn't need to beat up the creditors in order to reorganize the company--or at least, they wouldn't have needed to do so, if they weren't trying to make the creditors take less than they'd get in a liquidation. Nor did it need to do so to keep the UAW at the table--unlike capital, the UAW isn't going anywhere. The administration is beating up the creditors because a) it wants to give the UAW a much better deal than they'd get in liquidation and b) they'd like someone else to pay for it. I recognize that the law is always kind of messy, but as far as I know, this kind of blatant political intervention between debt claims is unprecedented, and worse, it's a dress rehearsal for doing the same thing at GM. I don't think this is good for the rule of law, I'm pretty sure it will be bad for capital markets, and I'm nearly positive it's going to make it hard for any heavily unionized company to get substantial capital for the next decade. And why? It hasn't exactly enhanced Chrysler's already dicey chances of survival."
Read the whole post. Megan, yet again, makes too much sense to ignore....
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