Did the White House threaten a Chrysler creditor who refused to sign on to the rescue plan brokered by the government? That’s the charge levelled on Friday by a lawyer for the holdout creditors. In an interview with a Detroit radio station, attorney Thomas Lauria said that the investment firm Perella Weinberg Partners dropped its opposition to the plan after it “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”
The White House is denying the charge, as is Perella Weinberg. Interestingly, however, Perella — in denying that it was threatened — does concede that the decision was made due to political pressure and not just financial considerations. According to the firm’s statement, the firm stated the decision was made after considering the “president’s words” condemning the holdout creditors. “It is not our investment mandate to pursue political or risky legal campaigns,” it explained.
Perella Weinberg certainly would have much to lose in a political squabble with the White House. For instance, as noted in a Foundry post on Friday, the firm has a major consulting contract with the FDIC on banking issues.
Whatever the details, the imbroglio underscores the dangers a politicized bankruptcy process. Ultimately, creditor claims should be decided in court by a judge, not in the Oval Office by politicians. The President should take a step back and let the rule of law work.