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Letter: Auto bailouts didn’t follow proper rules




David A. Nealy

Greenwood

To the editor:

Recent Indiana Senate campaign (and presidential) debates have again raised the question of whether the earlier government bailouts of failing auto industry companies were in fact necessary or legally proper.

Any objective defense of rule of law — particularly bankruptcy law — would suggest the Indiana state officials (Mitch Daniels and Richard Mourdock) who objected to the government auto company bailouts by the Obama administration were in fact correct.

The Obama administration’s flagrant end run around established bankruptcy law rewarded favored constituents at the expense of taxpayers as well as senior debt holders (including Indiana’s public employee pension funds) with legitimate claims of financial recovery and/or ownership interest in a reorganized company.

Among other advantages, a company reorganization under established law would have preserved the rights of debt holders and allowed the company to reorganize minus the baggage of onerous debt and labor contracts.

In spite of claims to the contrary by the Obama administration, history would suggest that the auto companies reorganized under established law would have emerged with corporate structures every bit as successful as the current ones the administration claims it has “saved.”

 

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