The Great Debate Megathread! Black Lincoln versus whiter, richer Douglas!

[MadImmortalMan]

A smoking hot 9.5 just came to my front door asking me to vote for Mitt Romney.



The evil has been turned up to eleven, people. Of course, I invited her in to try to convince me why I should. 

Where was the hausfrau in all of this?

Not home yet. Would have been funny to see the look on both of their faces if she'd happened to arrive right then. Oh well. Viking, taking pics would have been tough to explain.  I might have been able to pull it off, but I dunno.

[jimmy olsen]

Anyone post Obama's Big Bird ad here yet? If so, I missed it.

http://youtu.be/bZxs09eV-Vc

[DGuller]

   Hey, Yi, want to cancel that bet we have?

[Syt]

For Seedy (in the unlikely case you've missed this one):

Romney Put Profits From China Ahead of Security for America

[The Minsky Moment]

Really??  Under US bankruptcy law creditors have to convince a judge that they would do better under liquidation than a settlement?

There was no settlement, there was an auction.

[CountDeMoney]

For Seedy (in the unlikely case you've missed this one):

Romney Put Profits From China Ahead of Security for America

You know I didn't, but thanks for the love.   

[Viking]

A smoking hot 9.5 just came to my front door asking me to vote for Mitt Romney.



The evil has been turned up to eleven, people. Of course, I invited her in to try to convince me why I should. 

Where was the hausfrau in all of this?

Not home yet. Would have been funny to see the look on both of their faces if she'd happened to arrive right then. Oh well. Viking, taking pics would have been tough to explain.  I might have been able to pull it off, but I dunno.

"Look, honey, I have to take this picture. It is for the internet."

DO: Go to the nearest Romney office ask for "that hot chick you paid to convince me to vote Romney" explaining that you need to take a picture because "the internet demanded it".

Edit: Even better if you bring a camera for the POV perspective.

[Admiral Yi]

There was no settlement, there was an auction.

And at the end of the auction the bond holders walked away with 15 cents on the dollar?

I get the impression you're word dancing on this one Joan.

[The Minsky Moment]

There was no settlement, there was an auction.

And at the end of the auction the bond holders walked away with 15 cents on the dollar?

I get the impression you're word dancing on this one Joan.

No I'm not - and that wasn't my intention.

There are two basic ways a Chapter 11 case can go - there can be a formal reorg plan (these days usually prepack) or there can be an aucition of assets using what is called Section 363(b).

Section 363 tends to get used where the bankrupt estate is bleeding out money and a quick resolution is needed to stem losses, which was the sitution both Chrysler and GM found themselves in.  It is fairly common and has been used many times before.

Assuming the Section 363 auction is conducted properly and fairly, there won't be prejudice to debtholders because it involves a market test of the value of the assets.  Whatever they fetch at auction is what they are worth.  In the case of the GM bankruptcy, the US government bid was easily the highest; no one else was prepared to pay value for the estate's assets. 

There was no restucturing alternative to the Section 363 sale.  Restructuring requies that the debtor secure outside financing (called "DIP" financing) to carry the company over.  No one was willing to be a DIP lender, other than Treasury.  And Treasury refused to provide DIP financing unless GM agreed to do the Section 363 sale.

So the bankruptcy court's perspective, the only alternative to the Section 363 sale was a liquidation.  The court considered that altenative.  It gave all parties the opportunity to submit evidence.  The overwhelming majority of debtholders, including the official creditors committee, supported the sale of the assets to Treasury.  The propononts of the sale submitted expert evidence to the Court establishing that in a liquidation, creditors would receive zero.  Dissenting bondholders had the opportunity to submit opposing evidence but failed to do so.  The court not surprisingly found that liquidation would not be a better option and thus approved the sale to Treasury.

The reason some people got exercised over the result in GM is that the purchaser of the assets (in this case Treasury) chose to agree to what some people saw as sweetheart deals with some of creditors (in particular UAW).  That is the purchaser's prerogative - i.e. the purchaser can make whatever arrangements they so choose.  What the purchaser CAN'T do is try to dictate what is done with the proceeds of the sale of asets - those proceeds have to be distributed strictly in accordance with bankruptcy priorities., and in the case of the GM bankruptcy, they were.

The real reason why this was controversial was that the purchaser in this case wasn't a private party, but the US government.  And the perception among some was that the government was giving a sweetheart deal to the unions.  That may be a legitimate objection to make but it doesn't implicate the rights of creditors in any way.  The non-UAW creditors had the right to receive their fair share of proceeds and they did.  The UAW creditors didn't get a dime more or less of those proceeds then they were entitled to by law.  They cut a nice deal with the government to get the auto workers back on the job for new GM, but that is a separate matter.

[Admiral Yi]

Interesting and helpful Joan, thanks.

So the gubmint at the time of the 363 was sole owner of GM?  And then decided to gift a certain percentage to the UAW?

[The Minsky Moment]

Interesting and helpful Joan, thanks.

So the gubmint at the time of the 363 was sole owner of GM?  And then decided to gift a certain percentage to the UAW?

The government was the owner of the new entity that bought the old GM assets, and decided to gift interests in that new entity to the UAW and have the new entity make other concessions.  But that didn't effect the rights of the GM creditors because they only had rights against the old entity.

Imagine for example that the Shop Around the Corner ("SAC") goes bankrupt.  The SAC trademark, their goodwill, the inventory of books in their corner store location are all sold via auction.  The highest bidder is Fox Books which pays $100,000.

Assume SAC owes $1 million to unsecured creditors who all rank equally.  They consist of
Bank loan - 500K
unpaid bills to vendors, etc - 400K
Meg Ryan's unpaid back salary - 100K

Then each of those creditors is entitled to 10 cents of the dollar for their outstanding claims.

But let's say Fox bought the SAC assets because it intends to keep running the bookstore in its old location.  They think they can make money there using their own more efficient supply and acquisition chain and by having better marketing and promotion.  They also really want to keep Meg Ryan on because they think her bubbly good humor and infectious smile will help keep the old customer base.  But Meg won't work for them unless Fox agrees to pay the reamining 90K for her back salary.  So Fox agrees to pay up and as a result Meg ends up getting 100% of her losses paid at the end of the day, whereas everyone else only got 10%.

Now the other creditors might object and say this is unfair and even insinuate that Meg Ryan is getting a sweetheart deal because Fox's CEO is trying to make moves on her.  But they don't have much a leg to stand on because their rights are unaffected by Fox's deal with Meg.  No matter what they are entitled to the 10 cents in proceeds, no more no less and that is what they got.  And if there is soemthing improper about the special treatment of Meg, well that is an issue for Fox's Board of Directors or shareholders to examine because the money is coming out of the Fox corporate coffers, but it is irrelevant for the old SAC creditors.

The GM situation is similar - the government can be attacked for wasting taxpayer resources giving the Union more inducement than was commercially justifiable, but the injured party in that event is the taxpayer, not the old GM creditors.

[Phillip V]

The race is now at its most competitive all year with a relatively huge number of states in play. The big question, besides the next debate in a few days, is which states the campaigns will commit to and which will be abandoned. Will Romney actually try and seriously make a play for Michigan and Wisconsin? Is Pennsylvania also competitive? Does Romney actually have to worry about North Carolina? Thus, the four states I just mentioned are probably big question marks for both campaigns. There are so few days left and precious campaign dollars.
Focus or keep trying to broaden the map?

Concerning North Carolina, there have only been two polls done this October and both show Romney leads, so I think RCP will soon color the state pink. Obama has not been in the state since the Democratic National Convention.
The "softest" supposed toss-up states are Michigan and Pennsylvania. They previously had Obama leading by around double-digits, so I am skeptical that they are actually in play. If the two states continue to show tight polling after this Tuesday's debate, then Obama is in serious trouble.



Additionally, Romney has last week started outspending Obama for the first time this election in ad buys.

[Neil]

OK Joan, but what if the Corleone crime family goes bankrupt, or the Miami Sharks, or Weyland-Yutani?

[Eddie Teach]

It seems clear now that WV is the most racist state in the country. The south has been red since Reagan, they waited till the dems put up a black guy.

[derspiess]

It seems clear now that WV is the most racist state in the country. The south has been red since Reagan, they waited till the dems put up a black guy.

Incorrect.