NEW YORK -- A small group of Chrysler's lenders on Tuesday raised further objections to the Obama administration's plan for a quick dash through bankruptcy and called on the judge overseeing the case to block the effort.
Lawyers representing the group said the plan would subvert time-honored bankruptcy principles and prevent the automaker's creditors from getting a fair return.
The lenders, who hold more than $300 million of secured Chrysler debt, also asked the bankruptcy court for permission to keep the identities of their group secret, saying they were being blamed unfairly for Chrysler's failure amid a political backlash.
A public disclosure of the identities of the funds would "force several of these lenders to surrender their legal rights and agree to the government's illegal plan," said Tom Lauria, the lawyer for the dissenting Chrysler lenders, .
Employees of the investor group have received dozens of death threats, forcing some of the institutions to withdraw their opposition, the lenders said in a court filing.
Dissenting Chrysler lenders have been singled out for criticism, starting with President Barack Obama's announcement of the Chrysler bankruptcy last week when he described the dissenting lender group as "speculators."
Michigan Governor Jennifer Granholm called the group's members "greedy hedge funds," and U.S. Rep. John Dingell, a Michigan Democrat, called them "vultures."
"While the present case is unusual in many ways, perhaps the most extraordinary is the unprecedented involvement of the United States government," the group said in court papers.
In the face of the pressure, lawyers for the Chrysler lenders said the holdout group had been shrinking.
Chrysler's first-lien lenders were owed a collective $6.9 billion stemming from the automaker's breakaway from Daimler AG in 2007. About 70 percent of the debt was held by four large banks that have received support under the U.S. government Troubled Asset Relief Program.
The dissenting secured lenders contend the large banks, which agreed to the Chrysler bankruptcy plan, do not represent their interests because of their participation in the government support program.
"The pressure on the Chrysler non-TARP lenders grows by the hour," the group said in its court filing.
Chrysler, which filed for bankruptcy in New York on April 30, has asked for permission for a quick sale of most of its assets to a new company held by Italy's Fiat SpA, a United Auto Workers union-aligned healthcare trust and the U.S. and Canadian governments.
A hearing on the sale procedures requested by Chrysler was scheduled for later today. The automaker has asked for a required hearing into the proposed sale as soon as May 21.
The lender group said in documents filed with the bankruptcy court that the procedures were "designed to prevent, not encourage, competitive bidding." It called the accelerated timetable an "absurdity."
The group has asked the court to deny the sale or require a substantial modification.
"Through the sale procedures, the debtors in effect preclude anyone but the government from bidding on the debtors' assets," the group said in court papers. "Accordingly, the sale procedures are inherently unfair and do not comply with the fundamental purpose for bidding procedures -- to maximize the sale price for the debtors' assets."
The case is in re Chrysler LLC, U.S. Bankruptcy Court, Southern District of New York, No. 09-50002.
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