Chapter 11 Bankruptcy Abuse... Here We Go Again With Solyndra!
by TexasGOPVote on July 31, 2012 at 11:09 AM
Solyndra, the poster child for the Obama Administration's misuse of taxpayer sponsored loans, is back in the news again. According to Bankruptcy Law Review, the firm announced their intention to seek United States Bankruptcy Code Chapter 11 reorganization last Friday, July 27. Perhaps it's not that unusual in this day and age, but this is the company that received questionable financial support from the Obama administration just before its collapse. Investigations in Congress are still underway.
The Obama administration is no stranger to Chapter 11. The Chrysler bankruptcy was organized entirely by the Obama Administration as a “pre-packaged” arrangement, supposedly to save jobs. However, it left the shareholders, including individuals and institutions, as well as junior creditors completely out in the cold. According to Bankruptcy Law Review:
"The Government then orchestrated a vexatious sale plan, under section 363 of the Bankruptcy Code, in which Chrysler’s assets were sold to a shell company ('New Chrysler') which was a construct of the US Government, and which included the Canadian Government, FIAT, and the United Auto Workers Union. No ordinary stockholders were members of the above club nor were they invited."
In Chrysler, as was also the case with the General Motors bankruptcy, the individual shareholders were essentially washed away. Will it be the same with Solyndra, with the taxpayer left holding the bag? Perhaps this is a new cronyism, ushered in by the Obama administration. Whereas traditional capitalist cronyism involved getting involved in investments in the early phases as an insider with some risk, this new “Obama cronyism”, as demonstrated by corporate bankruptcy abuse, feeds on the weak and struggling with little or no risk to the cronies.