According to White & Case’s Tom Lauria, it’s not just the White House threatening his clients. The White House, of course, denied those allegations. But the story has taken two interesting turns. First, Perella Weinberg may not have been the only non-TARP creditor threatened by the administration. John Carney is all over this one:
Although the focus has so been on allegations that the White House threatened Perella Weinberg, sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.
More on that, plus White & Case keeps the accusations coming, after the jump.
What did the administration allegedly do?
The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking “end justifies the means” group they have ever encountered. Another characterized Obama was “the most dangerous smooth talker on the planet- and I knew Kissinger.” Both were voters for Obama in the last election.
One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.
Carney boiled it down to a pretty simple issue yesterday: someone’s lying, who is it going to turn out to be, Lauria or Rattner/the administration? But Carney thought “We wouldn’t be surprised if intense pressure is now being brought to bear on Lauria to recant his original story. If anything, it’s surprising that Lauria has gone this far.”
Lauria isn’t backing down, which brings us to the second twist in the case:
Lauria and two of his partners, Glenn Kurtz (BA SUNY Albany ‘86, JD BU ‘89), a litigator we should add to the list of lawyers in l’Affaire Madoff, because he’s also representing Walter Noel, co-founder of Fairfield Greenwich Group, and Gerard Uzzi (BE Stevens Institute of Technology (wtf?) ‘91, St. Johns JD ‘96) a bankruptcy partner, filed a motion (courtesy of the Bankruptcy Beat) to authorize the firm’s filing information about its clients under seal. Why?
Denial of [the ability to proceed under seal] will force several of these lenders to surrender their legal rights and agree to the government’s illegal plan. Those lenders that continue to seek to enforce their legal rights will be subjected to threats to their reputations and businesses, public attack, and threats to their safety. This cannot be allowed.
But what do they have to fear? Two things: more harassment of the type Lauria claims Perella Weinberg faced; and threats of violence from the public at large. White & Case claims that the threats were so troubling that a number of non-TARP lenders were so afraid that they capitulated and agreed to the government’s plan
The complaint is an entertaining read, with section headings like “The Government Strong Arms Lenders To Consent To its Plan,” so make sure to read it. Here’s the preliminary statement to whet your appetite:
While the present case is unusual in many ways, perhaps the most extraordinary is the unprecedented involvement of the United States government. Never before has the President of the United States announced a chapter 11 filing in a national address. Even more remarkably, the President singled out creditors who did not agree to the government’s intentions regarding Chrysler, which includes paying billions of dollars to unsecured creditors while paying first-lien secured creditors less than thirty cents on the dollar. The President publicly chastised these secured creditors for having the temerity to enforce their constitutional rights in this court of law, branding them as “speculators,” making clear that “I don’t stand with them.” The President’s remarks announcing the bankruptcy filing are merely the most public in a series of steps undertaken by the current administration to subvert the rule of law by forcing Chrysler stakeholders to agree to a sub rosa plan of reorganization which wholly ignores time honored bankruptcy principles.
The government now comes before this Court and trumpets the fact that many of Chrysler’s lenders have succumbed to these coercive tactics. Indeed, a decreasing number of creditors remain willing to ask this Court for fair treatment under the law. The pressure on the Chrysler Non-TARP Lenders grows by the hour. For this reason, a number of lenders have sought representation in this case, but only on the condition that their identity not be disclosed publicly. Accordingly, the Chrysler Non-TARP Lenders seek an order allowing White & Case to file its 2019 statement under seal, so that only the Court will know the identity of the Chrysler Non-TARP Lenders. Denial of this relief will force several of these lenders to surrender their legal rights and agree to the government’s illegal plan. Those lenders that continue to seek to enforce their legal rights will be subjected to threats to their reputations and businesses, public attack, and threats to their safety. This cannot be allowed. Under these circumstances, the Motion should be granted.
Stay tuned kids, this is just going to get better.
Related posts:
Quoting Carney? Seriously?
Lauria is just making noise since W&C has no other work and they are trying to keep W&C afloat on the basis of this high profile engagement. Once it fades away (hopefully today when the Supreme Court finally throws out Lauria's objection), W&C will collapse.