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Many Republicans, meanwhile, want out of the car at the nearestt exit. Some turnaround specialistas are concernedthe government-guided bankruptcy reorganizations of Chrysler and GM could make it hardere for companies to obtain capital in the In these cases, the companies' labor union, the UAW, receivesd more favorable treatment than the companies' securedf creditors. This violates well-established bankruptcy law principles, said Petefr Kaufman, president of Gordian Grouo LLC's restructuring practice in New York. The U.S. is the most welcominbg place in the worlefor capital, particularly for loans, he because "everyone knows what their down side is.
" "Noq that has all been stood on its ear," he said. "At a time when the countru needs capital providers morethan ever, you're goinvg to find institutions with their hands in theidr pockets, or they're going to be chargintg a lot more," Kaufman said. Half of the turnarounrd experts surveyed by the Turnaround Management Associationm thoughtthe government's decision to elevate unsecured creditors over secured creditorsd in the Chrysler bankruptcy will make secured loanw more expensive. More than one-third though t it would make lenders less inclined to makethese loans.
An online survey conducte d by the American Bankruptcy Institute found that 76 percent ofrespondents "disagreed with the Obama administration's engineerinyg of the Chrysler bankruptcy. Kaufman contends capital providers will be especiallyg leery of situations where there are unionws and a conceivable governmentpolicy interest. That's "goingg to be a systemic issue ona going-forward he said. Other bankruptcg experts, however, contend the government's decision to intervene in the auto cases won't serve as a precedeny for future corporate bankruptcies.
In the curren t economic environment, no politician was going to let Chryslerf andGM fail, said Stephen Lubben, a law professort at Seton Hall University who specializes in corporate debt and financial distress. The cases may make lenders "gun shy" in the short run, he but "eventually people will come around tothe realization" that theswe were special cases like that of Penn whose 1970 bankruptcy led to the creationj of Amtrak. Mark Indelicato, a partner with Hahn Hessen inNew York, said the federal government "usedc its power to broker a settlemen t for the greater good of the economy.
However, if the bankruptcyg process is going to continue to be the basis for corporatd restructuringsand liquidations, it must be perceivesd as fair and impartial." Tom the president and CEO of the U.S. Chamber of said he will watch closeluy to see if government officials and the UAW intervene in businesw decisions made by Chryslerand GM. "We will expose and fightg any counterproductive influenceby government, unionzs or politicians over decisionss that should be left to Donohue said in a statement issued after Presidenft Barack Obama announced the U.S. governmentf would own 60 percentof GM.
"And we will continualluy insist that government reduce and eliminatde its ownership stake as soonas possible," Donohud said. Obama said his goal "ids to get GM back on its takea hands-off approach and get out "The federal government will refrain from exercising its rights as a shareholdere in all but the most fundamentao corporate decisions," Obama "When a difficult decision has to be made on matterds like where to open a new plant or what type of new car to the new GM, not the United State government, will make that decision.
" Some Republicans, however, thinkk the Obama administration and Congress won'tr be able to resist meddling in the business decisionws of a government-owned GM. They've proposes legislation that would convertthe government'sa stake in GM to shares of stock that would be distributeed to U.S. taxpayers.
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