Leading dissidents okay Chrysler restructuring plan

09 May 2009

A couple of dissident Chrysler lenders, including the OppenheimerFunds and Stairway Capital, have decided to withdraw their opposition to the Obama administration's debt restructuring plan for the auto maker.

The creditors withdrew their legal protest on Friday, indicating their willingness to cooperate with the auto maker's bankruptcy-court proceedings.

This will enable the administration to get Chrysler reorganised swiftly under the Chapter 11 bankruptcy court.

OppenheimerFunds, a unit of Massachusetts Mutual Life Insurance, and Stairway Capital were among the group of creditors that own a combined $295 million of the Chrysler's $6.9 billion in distressed debt to major financial institutions such as JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs, hedge funds and other Wall Street firms.

With this, the dissident lenders would hold less than 5 per cent of Chrysler's $6.9 billion in secured debt.

Although the loans are backed by company assets such as land, plants and equipment, the deal proposed those lenders to accept $2.25 billion to settle those loans.