Posted on 09/16/2011 7:01:22 AM PDT by Kaslin
Sources close to the Congressional investigation into the loans that the Obama administration made to bankrupt solar company Solyndra, say that Congress is likely to attempt to scuttle an agreement that the administration reached last February that allowed major investors to take precedent over US taxpayers in the liquidation of the company.
In February 2011, Solyndra renegotiated with creditors, including the United States Government, in order to try to avoid bankruptcy. In that deal, an investment group funded by Obama donor George Kaiser, gave Solyndra $75 million in additional money in the form of debt on the condition that the US Government took a subordinated position in any bankruptcy after the first $150 million was returned to the government.
What that means is that in a liquidation of Solyndra, the administration will allow that the first $150 million goes to the government, the next $75 million goes to Kaiser's fund. That would leave the government with a balance of $377 million outstanding unless a liquidation fetches more than $225 million.
In that case, the Kaiser investor group would likely control the amount of money that is eventually paid out to the government and other creditors and shareholders. This is a technique, known as a "cram down," that is often used by investors looking to gain control of a troubled company at the expense of other investors.
Democrat Senator Michael Bennet from Colorado used the same tactics to take control and combine three ailing movie theater groups in 2002. Bennet bought the senior debt of the companies while they were going down the tubes. This in turn allowed him to cut out other investors as the companies liquidated. Teachers' pension funds and other investors were forced to take pennies on the dollar for their investment because the Bennet group owned the senior position.
Within two years Bennet's group paid themselves back every penny they spent on the investment, gave Bennet $11 million, took on another billion dollars in debt, while public investors saw the price of the stock tank from $24 to $12 currently.
This is what the Louisiana Teachers' Pension Fund said at the time:
“…(T)he real explanation for draining the Company of its cash is that the Board is looting Regal and its subsidiaries to pay the individual Board members hundreds of millions of dollars in dividends, which have no legitimate business purpose and provide absolutely no benefit to the company.”
“(O)utrageous transfer of cash, which is leaving Regal in a clearly weakened and precarious condition… Anschutz and the Board are using Regal’s funds for their own personal purposes, leaving shareholders at risk of another trip through bankruptcy. There is simply no reasonable business objective for the Dividend.”
Yes, these are the guys who we send to the US Senate. In 2010, Bennet circulated a letter demanding that the country pass Obamacare with a public option. These are the guys we let design our healthcare system. Any questions?
The same "cramdown" technique could potentially allow the Kaiser group to force other investors in Solyndra into taking smaller amounts than the full value that they either invested or loaned to the company.
Sources familar with the law that governs the loan made under the Solyndra program however say that a plain reading of the law prevents the administration from allowing investors to jump ahead of government guaranteed loans under any circumstances.
Instead, members of Congress are likely to try to "cram down" the investment the Kaiser group made in February in an attempt to recover taxpayers' money.
But I remember the GM bankruptcy. Did the bond holders get the money they were entitled to? No. They got screwed so that the government could get a better deal.
I don't like Solyndra at all, but there seems to be a deal in place. Is the government going to ignore the agreement, screw the intended beneficiaries and try to finagle a sweet deal for the gov't?
This is why businesses won't take risks or hire people. Whatever they do, there is a real danger that the feds will come along and wipe the slate clean and say "Here's the deal that allows me to makeout real well, and you not so much."
But if they take that money from Kaiser, he will not have as much to give to Obama! I am sure that this will get settled after the 2012 election so that Barry can get his money from Kaiser and Kaiser can keep the money from Barry. Isn’t that what the left calls fair and balanced??
Let’s add some Claw Back to that Cram Down
At GM, the stockholders got screwed in favor of the gov’t.
At Solyndra, the taxpayer got screwed in favor of private investors who happen to be 0bama cronies.
http://www.freerepublic.com/focus/f-news/2779279/posts
On July 29, 2011 (just five-weeks before going bankrupt) Solyndra (“SOL”) entered into a transaction whereby it sold both the Accounts Receivables (IOUs from panels sold) and the Inventory (panels) of the company ("the A/R Transaction”). Solyndra Financial (“SOLF”) (a subsidiary of SOL) was the seller. The purchaser was a newly formed company called Solyndra Solar II LLC (“SSII”). The following is the only information that I could find about SSII. Note that the company was organized in the Sate of Delaware one-day before the sale of significant assets of SOL.
Any legitimate business investors out there who see binding legal agreements put in place by a business -- agreements which are then brushed aside and abrogated by the federal government so that "the government" or "the taxpayer" can make out well -- legitimate business investors can see that chicanery and they will decide not to risk their capital until either 2013 or 2017.
Solyndra may be a bad example for me to use to make the case, but I think it is this sort of hijinx which prolong our economic downturn.
I don’t believe it’s a deal for the government. I believe it’s a deal for the big donor of the Obama re-election. If this guy didn’t get his money back, he, most likely, wouldn’t donate to Obama. Simple as that.
It’s their worldview that makes them think that they can arbitrarily decide who gets what when and it not have effects beyond what they intend.
It’s the “chess piece fallacy”.
Leftists, in their arrogance and Darwinist worldview, think they are “more evolved” than the masses and can make better decisions than everyone else, on an ad hoc basis.
Hussein took the taxpayers for half a billion after warning flags were being thrown at him from all corners. It was fraud, pure and simple—except if one is above the law.
The whole deal was bogus and fraud should definitely be uncovered.
As much money the tax payer paying out for Obama’s screw ups he should at least give us a chevy Volt with a solar panel.
People need to understand one basic tenet about this lawless administration: the rule of law no longer exists. The law is what the fascists say the law is. It’s up to the people to correct this situation and apply the proper rule of law by whatever means necessary.
The taxpayer did not sign on for a deal where the terms of the financing were changed to privilege the investment of a major campaign donor.
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