NEW YORK (Reuters) - More than half of the parties opposing Chrysler’s plan to sell itself quickly have dropped out of a group that has been required to reveal its participants, as public and political pressure grows to restructure the automaker quickly.
A group of about 20 participants had once opposed the Chrysler plan to use the bankruptcy process to sell itself rapidly, saying the proposed bidding process for the company’s assets is “designed to prevent, not encourage, competitive bidding” and does not maximize the sale price.
The number has fallen to nine parties, according to court documents filed on Wednesday by law firm White & Case, which is representing the group of senior lenders.
The group, which includes Foxhill Opportunity Master Fund LP, had asked the court to keep their fund names unpublished, saying they feared harm to their professional reputations or even their families, but the judge in the bankruptcy case ordered on Tuesday that the participants be revealed.
A representative from Foxhill declined to comment.
The group, which calls itself the Chrysler Non-TARP Lenders, holds more than $295 million principal amount of the senior debt, according to the filing. The group has said it has not taken bailout money from the government and said that the large banks, which agreed to the Chrysler bankruptcy plan, do not represent its interests because of their participation in the government support program.
The group members, led by Oppenheimer Funds and Stairway Capital, have declined to restructure their debt at a steep discount and opposed the company’s plan designed to sell itself quickly to Fiat. They have come under criticism from U.S. President Barack Obama and others who say the group is standing in the way of the company’s rapid restructuring.
Holders of the debt include Schultze Master Fund Ltd, Arrow Distressed Securities Fund, Schultze Apex Master Fund, Stairway Capital Management II, L.P. Group G Partners LP, GGCP Sequoia L.P., Oppenheimer Senior Floating Rate Fund, Oppenheimer Master Loan Fund LLC, Foxhill Opportunity Master Fund, LP.
Representatives from Schultze and Arrow were not immediately available to comment. Geoffrey Gwin, a principal at Group G Capital Partners LLC, declined to comment, referring questions to his attorney.
The bondholders “have been referred to as ‘dissident,’ which may not be a fair characterization,” said Gabe Fried, managing member and founder of Streambank LLC, an intellectual property consulting firm. “It’s very difficult for a bondholder entity to go back to their investors and say we know we have a fiduciary obligation to you but in this case we decided to waive that in order to be nice to the estate. They expose themselves to liability if they do that.”
White & Case said in the filing, it has represented other senior lenders who “have elected for various reasons to withdraw from the Chrysler Non-TARP Lenders.” The firm also said it is aware of senior lenders who have not consented to Chrysler’s current proposal but who have declined to join the group, “as a consequence of concerns stemming from publicity of these chapter 11 cases.”
The U.S. automaker filed for bankruptcy protection on April 30. Chrysler is the sixth-largest U.S. corporate bankruptcy filing since 1980 and is the biggest manufacturing bankruptcy, according to bankruptcydata.com.
The case is In re: Chrysler LLC, U.S. Bankruptcy Court, Southern District of New York, No. 09-50002.
With additional reporting by Thomas Hals, Emily Chasan and Walden Siew; editing by Steve Orlofsky and Matthew Lewis
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