[phileysmiley]

NOTE: Michael Richman, the attorney quoted in the article representing the bondholders in their fight against GM, is my brother.
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GM Bondholders to Protest Sale After Chrysler Ruling
By Linda Sandler, Christopher Scinta and Tiffany Kary
June 11, 2009

A group of individual General Motors Corp. bondholders plans to protest the scheduled sale of most of the carmaker’s assets to a spinoff entity if they are recognized as an official bankruptcy committee, the investors’ lawyer said. GM creditors face a June 19 deadline to oppose a plan to create a streamlined company with trimmed debt and wage costs. Chrysler LLC, after defeating a creditor challenge June 9 in the U.S. Supreme Court, sold its Chrysler, Jeep and Dodge brands yesterday to a new company run by Fiat SpA in a similar move.

“GM is completely different from Chrysler on the essential facts, and the Supreme Court made no decision other than to reject the appeal in Chrysler, so it has no precedential effect on our situation,” said Michael Richman, a lawyer in the New York office of Washington-based Patton Boggs LLP who represents an unofficial three-person committee of the bondholders. GM bondholders won’t repeat the Chrysler creditors’ challenge to the use of billions of dollars from the Troubled Assets Relief Program to finance the sale, Richman said.

“The main issue is not about TARP funds, but rather the manner in which the parties have purported to allocate ownership in the new GM,” he said. GM’s spinoff proposal “appears to us to be designed as a sale in order to evade the plan confirmation requirements of the bankruptcy code,” he said. Normal bankruptcy procedures require months of objections, hearings, evidence presentation and valuation trials. GM spokesman Tom Wilkinson declined to comment.

The Obama administration set a goal of completing the sale in 60-to-90 days from the date of Detroit-based GM’s June 1 bankruptcy filing. GM Chief Financial Officer Ray Young told Bloomberg News June 4 the spinoff might be done in 60 days. Chrysler’s creditors lost their fight after the Auburn Hills, Michigan-based carmaker and the U.S. government argued that every day of delay to consider creditor legal attacks was costing the government $100 million a day, would scuttle the deal and might result in liquidation and loss of 38,500 jobs.

MORE:
http://www.bloomberg.com/apps/news?pid= ... .9cA5RicQ#

[Grav!ty]

I guess Michael Richman is your brother Larry? Is he older or younger than you?

[phileysmiley]

I guess Michael Richman is your brother Larry? Is he older or younger than you?

Yupp. He's older.

Here is some info:

http://www.pattonboggs.com/mrichman/

A nationally recognized bankruptcy lawyer, Michael P. Richman is the Chair of Patton Boggs' Bankruptcy and Restructuring practice group. He focuses on the representation of chapter 11 debtors and creditors’ committees, and also regularly advises and represents clients in virtually every aspect of financial distress and bankruptcy, including out-of-court restructurings, prosecution and defense of creditors’ rights litigation (including preference and fraudulent conveyance cases), individual and group secured and unsecured creditors, landlords, purchasers of assets under Bankruptcy Code section 363, and other parties in interest. Throughout his extensive career, Mr. Richman has appeared as counsel in state and federal courts, and bankruptcy courts in particular, in at least 20 states and territories.

Mr. Richman was a partner and former chair of the national Bankruptcy & Business Reorganizations Practice at Foley & Lardner LLP before joining Patton Boggs. He was also a partner at Mayer Brown LLP where he served as national bankruptcy counsel to the Center for Claims Resolutions in chapter 11 cases of asbestos producers and suppliers.

An active member of the American Bankruptcy Institute (ABI), Mr. Richman has served as director (1996-2008), chairman of the board (2006-07), and president (2004-05) of that organization. He has also been a member of ABI’s management and executive committees. He is also the founder and a performing member of ABI’s house band, the Indubitable Equivalents, which regularly performs at bankruptcy conferences around the country.

Mr. Richman is a contributing editor to the American Bankruptcy Institute Journal. He was the managing editor of the Columbia Journal of Transnational Law while in law school. Mr. Richman is also a frequent speaker and lecturer on bankruptcy law and related topics.

Representative Matters:

* Served as national bankruptcy counsel to Ernst & Young LLP.
* Served as lead counsel to chapter 11 debtors Proxymed and Diamond Glass, Inc. (Wilmington, DE).
* Acted as lead counsel to prospective debtors in out-of-court restructuring of companies in broadcasting and leisure travel businesses.
* Served as lead counsel to Official Committees of Unsecured Creditors in chapter 11 cases of Centrix Financial (Denver, CO) and NewComm Telecommunications (San Juan, PR).
* Represented debtor in chapter 11 case of Medifacts International (Wilmington, DE).
* Served as lead counsel to Best Buy in defense of $250 million avoidance action litigation brought by Creditors’ Committee of Musicland (New York, NY).
* Acted as special bankruptcy counsel to Huron Consulting in its retention as advisor in St. Vincent Hospitals’ chapter 11 cases (New York, NY).
* Represented Goldin Capital in the successful acquisition of a business in a contested section 363 auction in chapter 11 case of Skin Nuvo (Reno, NV).
* Served as counsel to the state of Mississippi in a $5 billion tax claim against MCI/Worldcom (New York, NY).
* Represented Textron Financial Corporation as secured creditor in the chapter 11 cases of Leisure Industries (Reno, NV).
* Acted as co-counsel to Credit Suisse First Boston in contested plan confirmation hearings in the OSI chapter 11 cases (St. Louis, MO).
* Served as counsel to agent lenders, including Bank of Nova Scotia and Textron Financial Corporation, in significant out-of-court financial workouts and restructurings.
* Served as counsel to Bank of Montreal in adversary proceedings to determine status as secured or unsecured of over $1 billion of debt in Loewen chapter 11 cases (Wilmington, DE).
* Represented Umbro Worldwide in dispute with debtor licensee and co-licensee (New York, NY).
* Served as counsel to GE Capital Corporation in Loews Cineplex chapter 11 cases (New York, NY).

Professional Affiliations:
Advisory Board Member, ABI Annual New York City Bankruptcy Conference
Advisory Board Member, Views from the Bench Program at Georgetown University Law Center
Advisory Board Member, VALCON Conference
American Bankruptcy Institute
American Bar Association, Committee on Business Bankruptcy
New York State Bar Association, Committee on Federal Courts; Subcommittee on Creditors’ Rights


Education

* Columbia Law School, J.D., 1979
* Vassar College, A.B., 1975
* London School of Economics and Political Science, year abroad


Bar Admissions

* District of Columbia
* New York


Court Admissions

* U.S. Court of Appeals for the Federal, 3rd, 5th and 9th Circuits
* U.S. Court of Appeals for the District of Columbia Circuit
* U.S. District Court for the District of Arizona
* U.S. District Court for the District of Colorado
* U.S. District Court for the District of Connecticut
* U.S. District Court for the District of Columbia
* U.S. District Court for the Northern District of Illinois
* U.S. District Court for the Western District of Michigan
* U.S. District Courts for the Eastern and Southern Districts of New York


Awards and Honors

* Who’s Who in America, American Law, and Finance and Business
* Recognized as a New York “Super Lawyer” annually since 2006
* Named one of 12 “Outstanding Restructuring Lawyers – 2004” by Turnarounds & Workouts
* Harlan Fiske Stone Scholar, Columbia University Law School
* David M. Berger Memorial Award, Columbia University Law School

[imnuts]

It seems interesting, but I thought the deal that was made before the bankruptcy by the bondholders and others would prevent something such as this from occurring, as the only real outcome I see of any delay is liquidation as GM is running through cash far to fast.

[phileysmiley]

It seems interesting, but I thought the deal that was made before the bankruptcy by the bondholders and others would prevent something such as this from occurring, as the only real outcome I see of any delay is liquidation as GM is running through cash far to fast.

Obviously the deal wouldn't prevent this or it wouldn't be happening, of course.

The bottom line is that the bondholders/shareholders are generally more important than anyone else here, as I'm sure you'd agree if you were one of them.

Beyond that I can't comment since my brother is representing the bondholders.

I could pose your question to him if you need me to.

[imnuts]

I realize that they can do it, but I don't really understand what the bondholders are hoping to achieve with this. The company has almost no cash, and their assets are essentially worthless IMO. If they hold up the asset sale to long, it's going to be forced liquidation and the bondholders are likely going to get less than they would have under the deal that was made a couple days before their bankruptcy announcement. They have the potential to get up to 25% of the new company that is guaranteed, and would likely be able to acquire more than that. With this, I see them getting maybe 10% of what they held in bonds back as no one is really going to spend that much money to buy the plants and other GM assets when there is no current projection on when the auto industry will recover.

[phileysmiley]

I asked my bro if he could respond. Not sure if he has time but I'll post if he does.

[phileysmiley]

I contacted my brother and he graciously took the time to respond:

1. Bondholders as such did not make any deal. 54% of bondholders, all of whom were large institutions with hedging strategies and likely the benefit of federal bailout monies, are reported to have agreed to an offer from the Government for 10% of the New GM and warrants to acquire another 15%. The decision how to allocate the ownership of New GM should be up to the Debtors and the creditors, of whom the Government is one, and done under a plan and disclosure statement, rather than through the pretext of a sale. The thousands of smaller and individual bondholder who far outnumber the institutions were never asked, and do not agree with this allocation.

2. The smaller bondholders are not trying to prevent this reorganization. They are simply requesting that the Government and the Debtors comply with law, and allocate the ownership according to chapter 11. If the Court upholds the law it will not lead to liquidation.

3. The Debtors could easily have followed the law and filed a plan and disclosure statement on June 1 (or since). They chose deliberately not to, in order to use the pretext of a sale (to a shell company organized by the Government) to evade plan confirmation requirements and argue that the urgency of a sale requires bending the rules (and in doing so to give some parties more, for example, than the law would otherwise allow). There is no Fiat here. No independent third party. GM has been troubled for months, and there is nothing urgent or special about the June 30 deadline for the "sale" that is proposed here. The Court can say follow the law, and the company can be reorganized in accordance with the law, without doing any damage to New GM's prospects.

[augie]

Thank your bro' for me Larry, to give up some of his valuable time for us and keep it in layman's terms. Business must be booming for him in these hard times. (I really hope that didn't sound cynical).

[phileysmiley]

Thanks! I was glad he took the time. You're right, actually, he is one of the people who is actually benefiting from the economic situation.

Fortunately he defends the "other side" -- the people affected by the bankruptcies, not the companies themselves.