A dissident group of Chrysler lenders that has been challenging the automakers proposed merger with Fiat. disbanded after two of its five members OppenheimerFunds and Stairway Capital Management withdrew from the group, a lawyer for the group said today.
It reached a point where we didnt have a significant enough group, and it wasn't sensible to proceed, Glenn Kurtz, an attorney with White & Case, the law firm representing the dissident group, said in a telephone interview.
The disbanding of the group removes the most significant barrier to Chrysler completing its planned surgical Chapter 11 bankruptcy reorganization in its planned 30- to 60-day time frame.
The three remaining dissidents, Schultze Asset Management, Group G Capital Partners and Foxhill Opportunity Master Fund, own less than 2.8% of Chrysler's $6.9 billion in senior debt.
The large banks had agreed to the administration's offer of a $2 billion cash payment in return for forgiveness of the $6.9 billion debt, or 29 cents on the dollar.
Oppenheimer said last week that it rejected the government's offer because as a senior holder of secured Chrysler debt, it was entitled under U.S. bankruptcy law to more than was being offered to unsecured creditors.
The dissident group said last week it comprised 20 members holding $1 billion of Chrysler debt, but those numbers shrank once U.S. Bankruptcy Judge Arthur Gonzalez ruled this week that the group would have to disclose its members, many of whom are hedge funds that prefer to operate privately.
Oppenheimer, a unit of Massachusetts Mutual Life Insurance Co., had two funds with a total of $100 million in Chrysler debt that were part of the dissident group. The funds were Oppenheimer Senior Floating Rate Fund and Oppenheimer Master Loan Fund LLC.
Neil Roland is a reporter at Automotive News, a sister publication of Pensions & Investments